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Why Is Administrative Simplification So
Complicated?
Looking beyond 2010
Until now, efforts to reduce administrative burdens have primarily been driven by
ambitions to improve the cost efficiency of administrative regulations, as these impose
direct and indirect costs on regulated subjects. Many countries will finish their current
projects over the next few years and must decide how to continue their efforts and how
to make them more efficient.
This report looks beyond 2010 and presents policy options for administrative
simplification that are in line with current trends and developments. It provides policy
makers with guidance on the available tools and explains common mistakes to be
avoided when designing, undertaking and evaluating administrative simplification
programmes.
Looking beyond 2010
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www.oecd.org/publishing
isbn 978-92-64-08973-0
42 2010 24 1 P
Why Is Administrative Simplification So Complicated?
“Too much ‘red tape’!” is one of the most common complaints from businesses and
citizens in OECD countries. Administrative simplification is a regulatory quality tool
to review and reduce administrative and regulatory procedures. It has remained high
on the agenda in most OECD countries over the last decade and continues to be so.
Countries’ efforts to strengthen their competitiveness, productivity and entrepreneurship
during the current recession have made simplification efforts even more urgent.
Cutting Red Tape
Cutting Red Tape
-:HSTCQE=U]^\XU:
Cutting Red Tape
Why Is Administrative
Simplification So
Complicated?
Looking beyond 2010
Cutting Red Tape
Why Is Administrative
Simplification So
Complicated?
LOOKING BEYOND 2010
ORGANISATION FOR ECONOMIC CO-OPERATION
AND DEVELOPMENT
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to understand and to help governments respond to new developments and concerns, such as
corporate governance, the information economy and the challenges of an ageing population.
The Organisation provides a setting where governments can compare policy experiences, seek
answers to common problems, identify good practice and work to co-ordinate domestic and
international policies.
The OECD member countries are: Australia, Austria, Belgium, Canada, Chile, the
Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy,
Japan, Korea, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, the
Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the
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guidelines and standards agreed by its members.
This work is published on the responsibility of the Secretary-General of the OECD. The opinions
expressed and arguments employed herein do not necessarily reflect the official views of the
Organisation or of the governments of its member countries.
ISBN 978-92-64-08973-0 (print)
ISBN 978-92-64-08975-4 (PDF)
Serie: Cutting Red Tape
ISSN 1997-6666 (print)
ISSN 1997-6674 (online)
Also available in French: Pourquoi la simplification administrative est-elle si compliquée ? Perspectives au-delà de 2010
Corrigenda to OECD publications may be found on line at: www.oecd.org/publishing/corrigenda.
© OECD 2010
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FOREWORD
Foreword
A
dministrative simplification is a tool used to review and simplify the stock of
administrative regulations. It has stayed on the top of priority list in most OECD
countries in the last ten years. The main goal of activities focusing on
administrative simplification has been to remove unnecessary costs imposed on
regulated subjects by government regulations that can hamper the economic
competition and innovation.
There has been much progress in this area in recent years, especially in
connection with the ever-growing adoption of the original Dutch Standard Cost
Model (SCM) that has become the core tool to simplify administration. However,
the perception of SCM-based programmes still varies. Critiques among
stakeholders and academics are not fully satisfied with the value-added and costefficiency of such programmes.
Many countries will finish their current projects over the next few years and
now must decide how to continue their efforts. How can they be made more
efficient? This report looks beyond 2010 and presents policy options in line with
trends and developments and provides policy makers with guidance on possibilities
and common mistakes to be avoided when designing, undertaking and evaluating
administrative simplification programmes.
The OECD has been focusing for many years on the issue of reducing
unnecessary administrative costs as one of the most important tools of regulatory
reform. This report follows up on a series of reports on Cutting Red Tape as well
as national reviews of administrative simplification in the Netherlands and
Portugal. Administrative simplification is also a substantial part of work with the
non-member countries.
The interest of OECD countries in practical ways to remove unnecessary
administrative burdens will probably carry on in the near future. After the boom of
the use of the Standard Cost Model, especially among European countries, the
range of instruments for administrative simplification has increased and the focus
of administrative simplification projects widened.
This report uses information from the project Better Regulation in Europe:
An Assessment of Regulatory Capacity in 15 Member States of the European
Union, as well as information from recent work of the OECD Secretariat such as
the Reviews of Regulatory Reform in Australia and Italy and current co-operation
WHY IS ADMINISTRATIVE SIMPLIFICATION SO COMPLICATED? © OECD 2010
3
FOREWORD
with Greece and Mexico. Sixteen member countries, Slovenia and the European
Commission responded to a questionnaire in 2009.
The report was carried out as part of the programme of work of the OECD’s
Regulatory Policy Committee. It builds on previous work on administrative
simplification and regulatory burdens undertaken under the auspices of the Working
Party on Regulatory Management and Reform of the Public Governance Committee.
Acknowledgements. The report was prepared in the Regulatory Policy
Division of the Public Governance and Territorial Development Directorate by
Daniel Trnka, under the supervision of Josef Konvitz and the direction of Rolf
Alter. Useful comments have been provided by Christiane Arndt, Sophie
Bismut, Gregory Bounds and Caroline Varley. Jennifer Stein was responsible
for the editing and final document preparation. The report has benefited
from input from many country experts, national officials and Delegates to the
Committee. The report “Evaluating Administrative Burden Reduction
Programmes and their Impacts” in Annex B was prepared by Lorenzo Allio,
independent policy analyst and consultant and Andrea Renda, Senior
Research Fellow at the Centre for European Policy Studies in Brussels.
4
WHY IS ADMINISTRATIVE SIMPLIFICATION SO COMPLICATED? © OECD 2010
TABLE OF CONTENTS
Table of Contents
Acronyms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7
Executive Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11
Chapter 1. New Developments in Administrative Simplification . . . . . . .
Rapid spread of the use of the Standard Cost Model . . . . . . . . . . . . . .
Other trends in administrative simplification . . . . . . . . . . . . . . . . . . . .
Does public perception reflect results? . . . . . . . . . . . . . . . . . . . . . . . . . .
15
17
23
34
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
36
Chapter 2. Future Policy Directions for Administrative Burden Reduction . .
Policy Option 1. Broaden and widen administrative simplification
projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Policy Option 2. Quantify, but cautiously . . . . . . . . . . . . . . . . . . . . . . . .
Policy Option 3. Integrate administrative simplification with other
regulatory reforms and e-government . . . . . . . . . . . . . . . . . . . . . . . . . .
Policy Option 4. Create efficient institutional structures, involve
sub-national governments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Policy Option 5. Strengthen communication with stakeholders. . . . .
Policy Option 6. Assess programmes’ “value-for-money” . . . . . . . . . .
37
57
70
75
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
78
Conclusions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
81
83
Annex A. Policy Options. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Annex B. Evaluating Administrative Burden Reduction Programmes
and their Impacts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
87
91
Tables
B.1. Organisational arrangements and methodological approaches
to evaluation: An overview of the conceptual and practical steps . .
B.2. Forms of policy evaluations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
B.3. Empirical techniques used in the United Kingdom measurement
B.4. Evaluating the Commission’s use of the SCM in impact assessment
B.5. Ensuring a continued, multi-actor evaluation effort . . . . . . . . . . . . . .
100
103
117
117
132
WHY IS ADMINISTRATIVE SIMPLIFICATION SO COMPLICATED? © OECD 2010
38
45
52
5
TABLE OF CONTENTS
Figures
1.1. Explicit programme for reducing administrative burdens. . . . . . .
16
1.2. Methodology used for measuring administrative costs . . . . . . . . .
18
1.3. Tools used to review existing regulations . . . . . . . . . . . . . . . . . . . .
32
2.1. Use of targets in OECD countries . . . . . . . . . . . . . . . . . . . . . . . . . . . .
48
2.2. Number of countries having a programme on administrative
burden reduction, countries requiring RIA and having explicit
policy on regulatory reform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
57
2.3. Monitoring and evaluating simplification programmes. . . . . . . . .
77
B.1. A typology for observable effects . . . . . . . . . . . . . . . . . . . . . . . . . . . .
97
B.2. Breakdown of compliance costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
B.3. Monitoring and evaluating simplification programmes. . . . . . . . . 124
6
WHY IS ADMINISTRATIVE SIMPLIFICATION SO COMPLICATED? © OECD 2010
ACRONYMS
Acronyms
AB
ABN
AMB
ASA
BPTC
BRE
BPTC
CCDs
DCCA
EU
EUPAN
ICTs
IO
LBRO
MOA
NAO
NAOD
NRCC
OMB
PBRI
PRA
SBR
SCM
SEMA
VNG
Administrative Burdens
Australian Business Number
Administrative Management Bureau
Agency for Simplification of the Administration
Business Process Transformation Committee
Better Regulation Executive
Business Process Transformation Committee
Common Commencement Dates
Danish Commerce and Companies Agency
European Union
European Public Administration Network
Information and Communication Technologies
Information Obligations
Local Better Regulation Office
Misurazione degli oneri administrativi (Measurement of
administrative costs)
National Audit Office
National Audit Office of Denmark
National Regulatory Control Council
Office of Management and Budget
Paperwork Burden Reduction Initiative
Paper Work Reduction Act
Standard Business Reporting
Standard Cost Model
Secretary of State for Administrative Modernisation
Association of Netherlands Municipalities
WHY IS ADMINISTRATIVE SIMPLIFICATION SO COMPLICATED? © OECD 2010
7
Why Is Administrative Simplification So Complicated?
Looking Beyond 2010
© OECD 2010
Executive Summary
A
dministrative simplification is a regulatory quality tool to review and
simplify administrative regulation. It has remained high on the agenda in
most OECD countries over the last decade. Efforts to reduce administrative
burdens have primarily been driven by ambitions to improve the costefficiency of administrative regulations, as these impose direct and indirect
costs on regulated subjects.
Administrative simplification responds to a structural problem i.e. a
growing volume of regulations in response to:
●
Changing relations between the state and the economy as governments
withdraw from “command and control” modes while still needing to create
an effective regulatory environment.
●
Evidence of market failures.
●
Pressures to manage risks, either in reaction to events or pro-actively.
●
Technological innovations for social change.
Administrative simplification requires to link up ex ante assessment of
regulations and their ex post review, but this is difficult to make operational.
Burdens therefore increase, more by accident than design. This is why the
issue of burden reduction cannot be isolated from overall considerations of
regulatory quality management.
As presented in the introduction, major progress has taken place in the
area of administrative burden reduction. The original Dutch Standard Cost
Model (SCM) has been adopted by a growing number of countries in recent
years. The SCM or its modified version remains the core tool to simplify
administration. Other administrative simplification tools and processes (e.g.
codification and consolidation, creation of one-stop shops) stand in the
shadow of these efforts and sometime present only ad hoc endeavours that are
not, or poorly co-ordinated with mainstream efforts.
Chapter 1 summarises the latest developments in the area of administrative
simplification, including the numerous programmes to reduce administrative
costs, trends in dealing with regulatory stock, use of Information and
Communication Technologies (ICTs) for administrative simplification,
developments in the area of inspections and enforcement, regulatory reviews,
9
EXECUTIVE SUMMARY
etc. The perception of SCM-based programmes by those who should mainly
benefit from them, i.e. businesses and/or citizens, varies. Some critique has
emerged on the cost-efficiency of administrative burden reduction programmes
using the SCM. This section also discusses possible reasons why stakeholders
are often unimpressed by governments’ simplification efforts, adding to the
challenge of communications.
Many countries will complete their current administrative burden
reduction projects over the next few years and are standing at the crossroads on
deciding how to move on with their efforts, making them more efficient. This
report looks beyond 2010. Chapter 2 presents policy options in line with trends
and developments and provides policy makers with guidance on possibilities
and common mistakes to be avoided when designing, undertaking and
evaluating administrative simplification programmes. The policy options are
separately listed in Annex A.
Chapter 3 suggests a four-step test for an effective evaluation of projects
on administrative burden reduction. It examines aspects such as
proportionality, effectiveness, efficiency, macroeconomic impacts and
perceived actual impacts of the reduction exercise.
Drawing on the experience of OECD countries, the report finds that:
10
●
The focus of administrative simplification projects should be broadened to
citizens and the public sector, and to costs other than administrative.
●
Governments should quantify administrative burdens and set quantitative
targets for their reduction programmes, however quantification should be
used cautiously complemented by qualitative methods.
●
Administrative simplification should be integrated and co-ordinated with
other activities in the area of regulatory reform.
●
Efficient institutional structures for co-ordination and monitoring of
administrative simplification projects should be created.
●
Communication with stakeholders must be strengthened.
●
Administrative simplification efforts should be evaluated for their “value
for money”. An evaluation strategy should be developed before launching a
project.
WHY IS ADMINISTRATIVE SIMPLIFICATION SO COMPLICATED? © OECD 2010
Why Is Administrative Simplification So Complicated?
Looking Beyond 2010
© OECD 2010
Introduction
What is administrative simplification?
Regulations and formalities are important tools used by governments to
provide services and to carry out public policies in many areas. Administrative
burdens have tended to grow in number and complexity, as governments need
more information to implement their policies and target their regulations and
instruments on more specific issues and populations. The growing use of
formalities has become a major problem, known as “red tape” or administrative
burdens. Formalities increase costs and multiply barriers for businesses
through the time and money needed for compliance. This can, in addition,
reduce regulatory certainty, a key parameter for businesses.
Administrative simplification is a regulatory quality tool to review and
simplify administrative regulations: paperwork and formalities through
which governments collect information and intervene in individual economic
decisions.
Administrative simplification has remained high on the agenda of most
OECD countries over the last decade. With the complexity and dynamism of
societies and economies creating a demand for new and revised regulations,
the intricacy of the regulatory framework and the burden it presents for
citizens, businesses and the public sector has become excessive.
OECD work on administrative simplification 2003-08
The OECD has been focusing for many years on the issue of reducing
unnecessary administrative costs as one of the most important tools of
regulatory reform. The 2003 OECD report on administrative simplification,
From Red Tape to Smart Tape – Administrative Simplification in OECD Countries, was
based on case studies from a limited range of countries when the topic was
new, and had a strong focus on the tools used to simplify administrative
regulations.
Cutting Red Tape: National Strategies for Administrative Simplification (2006)
followed with data gathered from a majority (22) of OECD countries. Between
the two reports, administrative simplification gained momentum very quickly.
Ad hoc simplification initiatives had in some cases been replaced by
comprehensive government programmes to reduce red tape. Some instruments,
11
INTRODUCTION
such as one-stop shops, had become widely adopted. New programmes and
initiatives were being implemented, notably with a focus on quantitative
instruments such as the Standard Cost Model, at the time a still relatively new
method for measuring administrative costs, but gaining popularity and
growing use.
With respect to the fast growing methods to measure and quantify
administrative costs, the OECD launched a pilot project across eleven member
countries on measuring and comparing administrative burdens in the
transport sector. The project resulted in the 2007 publication Cutting Red Tape:
Comparing Administrative Burdens across Countries. The aim of the exercise was
twofold: it identified good practices and provided input for national
simplification strategies, and second, it developed and tested a method for
cross-country comparison. It demonstrated that measuring and comparing
administrative burdens across countries is possible but not easy nor
straightforward.
The OECD has also conducted peer reviews of national administrative
simplification programmes. Two national reports were published with a
strong focus on administrative simplification: Cutting Red Tape: Administrative
Simplification in the Netherlands (2007) and Making Life Easy for Citizens and
Businesses in Portugal (2008). The first reviewed the national programme for
administrative simplification in the Netherlands, one of the frontrunners
in the field. The report explored options for future work on administrative
simplification relevant to OECD countries, highlighting the need to communicate
better with stakeholders, cover compliance costs for business more broadly,
and look at burdens on citizens and administrations.
The second report examined a unique and ambitious initiative in
Portugal to make the public sector more efficient and effective: the Simplex
initiative. This initiative focuses on how e-government can be used as a lever
for broader administrative simplification, making service delivery more
coherent and efficient. This was the first integrated study undertaken by the
OECD to analyse administrative simplification and e-government in a national
context. In bringing those two areas together in the context of public
management reform, this review helped countries identify how reform
activities can best support overall government performance and economic
growth.
Administrative simplification is also an important part of work with nonmember countries. In the framework of the Governance for Development in
the Arab Countries Initiative, this topic, closely related to the focus areas of
e-government and regulatory reform, has been identified from the outset of
initiatives as a top priority for Arab countries. The handbook Overcoming
Barriers to Administrative Simplification Strategies reviews common barriers to
12
WHY IS ADMINISTRATIVE SIMPLIFICATION SO COMPLICATED? © OECD 2010
INTRODUCTION
designing and implementing the strategy for administrative simplification
and offers a checklist of 22 approaches to overcome them, providing a
synthesis of good practices among policy makers and practitioners.
Substantial work has been done also in the area of regulation inside
government. The proceedings of the 2006 International Forum in Mexico City
and the 2008 OECD report Regulation Inside Government provide a comprehensive
theoretical and conceptual framework, and on its basis and analyses, internal
regulation in four selected cases.
WHY IS ADMINISTRATIVE SIMPLIFICATION SO COMPLICATED? © OECD 2010
13
Why Is Administrative Simplification So Complicated?
Looking Beyond 2010
© OECD 2010
Chapter 1
New Developments in Administrative
Simplification
This chapter summarises the latest developments in the area of
administrative simplification, including the numerous programmes
to reduce administrative costs, trends in dealing with regulatory
stock, use of Information and Communication Technologies (ICTs)
for administrative simplification, developments in the area of
inspections and enforcement, regulatory reviews, etc. It also deals
with the issue of perception of SCM-based programmes by
businesses and/or citizens and discusses possible reasons why
stakeholders are often unimpressed by governments’ simplification
efforts.
15
1.
NEW DEVELOPMENTS IN ADMINISTRATIVE SIMPLIFICATION
A
dministrative simplification has remained high on the agenda in most of
OECD member countries over the last decade. With the complexity and
dynamism of societies and economies creating a demand for new and
revisions to existing regulations, the intricacy of the regulatory framework and
the burden it presents to citizens and businesses as well as the public sector
became excessive. As Figure 1.1 shows, in 2008, 30 out of 31 jurisdictions had
programmes to reduce administrative burdens compared with 25 in 2005 and
18 in 1998.
Figure 1.1. Explicit programme for reducing administrative burdens
1998-2005-2008
1998
0
5
2005
10
15
2008
20
25
30 31
Number of jurisdictions
Source: OECD Regulatory Management Systems’ Indicators Survey 1998, 2005 and 2008,
www.oecd.org/regreform/indicators.
Efforts to reduce administrative burdens in OECD member countries have
primarily been driven by ambitions to improve the cost-efficiency of
administrative regulations. Direct administrative compliance costs include
time and money spent on formalities and paperwork to comply with
regulations. Indirect or dynamic costs arise when regulations reduce the
productivity and competitiveness of enterprises.
The recent economic crisis has contributed to further underscore the
importance of administrative simplification. It helps to free resources that are
16
WHY IS ADMINISTRATIVE SIMPLIFICATION SO COMPLICATED? © OECD 2010
1.
NEW DEVELOPMENTS IN ADMINISTRATIVE SIMPLIFICATION
being spent on compliance and enables them to be invested in jobs and
support economic recovery and growth. Therefore, administrative simplification
becomes one of the important tools on how to overcome the crisis and re-boost
growth.
The focus on administrative burdens has been attractive to OECD
governments probably because they represent a part of regulatory costs that
can be relatively easily identified and measured. Furthermore, reductions in
this type of burden do not require an evaluation of the regulations’ policy
objectives. The “paperwork” is also usually identified by regulated subjects as
the most annoying and as a negative symbol of bureaucracy.
Burden reduction provides a mechanism that can be used to create an
incentive for compliance by agencies without determining in advance where
the reductions in regulatory burdens are going to come from. Finally, the
success of the programmes can be measured and communicated to
businesses to build support for reform.
Rapid spread of the use of the Standard Cost Model
With the development of the Standard Cost Model (SCM) by the Dutch
Ministry of Finance, the characteristics described above became even more
obvious. The main success factors in the Netherlands and other countries
using this model were a sound methodology for mapping and measuring
administrative burdens and the possibility to set up a quantitative target for
reduction. The latter factor enabled to create a benchmark against which
progress could be measured.
The original Dutch Standard Cost Model has been adopted by a growing
number of countries in recent years. The countries using the Standard Cost
Model include Austria, Belgium, Czech Republic, Denmark, Estonia, France,
Germany, Italy, Latvia, Netherlands, Norway, Poland, Slovenia, Spain, Sweden,
United Kingdom, Romania, Ireland, Portugal, Turkey, Cyprus, 1 Greece,
Lithuania, Finland and the State of Victoria, Australia.2
The programmes on administrative simplification, and again especially
administrative burden reduction, are often perceived as politically neutral.
Removal of unnecessary burdens by definition should not go against the policy
objectives of regulations. These goals should be only fulfilled more efficiently
by improving the way regulation is enforced and complied with. Removing
obligations that are not necessary does not mean changing policy goals. This
is why administrative simplification is usually popular across the political
spectrum. There is no need to mention that the idea of “debureaucratisation”
is also attractive for the electorate. Setting the quantitative target may also be
useful to attract media attention since it is easily presentable and controllable.
WHY IS ADMINISTRATIVE SIMPLIFICATION SO COMPLICATED? © OECD 2010
17
1.
NEW DEVELOPMENTS IN ADMINISTRATIVE SIMPLIFICATION
Figure 1.2. Methodology used for measuring administrative costs
16
Standard Cost Model
Adapted or modified version
from the Standard Cost Model
12
8
Other
0
5
10
15
20
25
30 31
Number of jurisdictions
Source: OECD Regulatory Management Systems’ Indicators Survey 1998, 2005 and 2008,
www.oecd.org/regreform/indicators.
Last but not least, setting up a target for burden reduction enabled to
increase pressure on involved administrative authorities. Before, targets were
usually expressed qualitatively and rather vaguely, such as removing all
unnecessary burdens. Definition of what is necessary was usually missing as
this was extremely difficult to define and also politically sensitive. The
response of those who were obliged to remove unnecessary regulations was in
many cases that all regulations in their competence were absolutely necessary
and inevitable, if not for anything else than to avoid the extra work connected
with examining and reviewing all the individual pieces of legislation.
One of the major factors that contributed to the rapid spread in use of this
approach was the initiative of the European Commission. In January 2007, the
Commission launched the Action Programme on reducing administrative
burden in the European Union (EU) to measure administrative costs arising
from legislation in the EU and reduce administrative burdens by 25% by 2012.
A key part of the Action Programme consists of a large-scale measurement of
administrative burdens in 2007-08 using a modified version of the Standard
Cost Model that should be followed by major simplification proposals aiming
to reduce administrative burdens on businesses (see Box 1.1).
The Action Programme was endorsed by the European Council in
March 2007. The Council specifically agreed to the joint reduction target and
invited member states to “set national targets of comparable ambition”. Even
though many of the European countries already had national programmes of
administrative burden reduction, the European Council decision represented
an additional impetus for those countries that were still hesitating to adopt
such programmes. All 27 member states of the EU have also adopted
quantitative targets of administrative burden reduction.
18
WHY IS ADMINISTRATIVE SIMPLIFICATION SO COMPLICATED? © OECD 2010
1.
NEW DEVELOPMENTS IN ADMINISTRATIVE SIMPLIFICATION
Box 1.1. EU Action Plan on the reduction of administrative burdens
on businesses
In November 2006, the European Commission proposed to reinforce the Better Regulation
initiative with a set of actions, including the launch of a strategy, together with member states,
to reduce administrative burdens on companies by 25% by 2012. It is estimated that reducing
administrative burdens by a quarter could lead to an increase of 1.4 % of EU GDP. The resulting
Action Programme was launched in January 2007.
The Action Plan was endorsed by the European Council in March 2007. The Council
specifically agreed to the joint reduction target and invited member states to “set national
targets of comparable ambition”.
A key part of the Action Programme consisted in a large-scale measurement of administrative
burdens in 2007-08, to be followed by major simplification proposals. However, in order to
produce concrete results in the short term, the Action Programme also included immediate
measures that were likely to generate significant benefits through technical changes in
existing rules. Because of the nature of the changes required, these measures can be adopted
fairly quickly. They are therefore called “Fast Track Actions”.
A first package of ten fast track actions was announced by the Commission in January 2007
with estimated savings of EUR 1.3 billion for EU businesses. The measures already adopted
were, for example, removing the requirement of costly expert reports, simplifying reporting
obligations for farmers regarding energy crops, easing the paper work for receiving export
refunds for agricultural products, simplifying statistic obligations on the information society
and removing unnecessary requirements for small fishing vessels.
In March 2008, the Commission presented a list of 11 new fast track actions. Unnecessary
administrative burdens were identified on the basis of internal reviews and suggestions
received from stakeholders and member states experts.
In the Action Programme, priority is given to 41 legal acts grouped in 13 areas and estimated
to account for over 80% of administrative burdens of EU origin. The priority areas were
selected based on a 2006 pilot study and include, among other, agriculture, company law,
cohesion policy, financial services, statistics, food safety, tax law, and transport.
All information obligations in the 41 legal acts and their national transposition acts have
been identified. The resulting costs imposed on businesses were measured in 2008. The
methodology used for the measurement is based on the so-called “EU Standard Cost Model”.
The aim then is to identify obsolete or repetitive information obligations which should be
clearly distinguished from legislative design features consistent or necessary for achieving the
benefits of legislation. Abolishing such information obligations will improve the effectiveness
of legislation without jeopardising the purpose of the legislation in case.
An operational manual for applying the EU model has been integrated in the Commission’s
Impact Assessment Guidelines.
Source: Website of DG Enterprise.
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Following are examples of new developments in some OECD countries
using quantitative methods, usually SCM-based, to measure and reduce
administrative burdens.
The Netherlands pioneered the development of a measurement system
for administrative burdens. The approach to administrative simplification
changed after meeting the 25% reduction target in 2007. An updated Action
Plan has been adopted, based on the recommendations of the joint review
conducted by the OECD and the World Bank. Specific targets have been set, to
be achieved by the end of the current Cabinet term:3
●
A new target for the reduction of administrative burdens on business.
Administrative burdens will be reduced by a further 25% by 2011, based on
a largely new baseline measurement.
●
Compliance costs and supervisory costs will be reduced as well. The SCM
methodology is being developed to broaden the definition of compliance
costs. Supervision and enforcement should be streamlined.
●
The costs for companies in relation to subsidies will be lowered.
●
Provision of services to businesses should be more professional, clientoriented and faster through addressing inconsistencies in the interpretation
of rules, lack of expertise, time delays, a Digital Counter for business, and
agreements with local/regional authorities for service improvement.
●
Information provision to business will be improved. This includes the
introduction of Common Commencement Dates (CCDs), and readable,
comprehensible forms.
●
Development of a “clearing house for the evaluation of legislation” should
consolidate previous disaggregated efforts at evaluation to achieve a more
systematic approach.
●
The procedure for granting permits will be accelerated by combining
licences and, where possible, by a broader application of the “Lex Silencio
Positivo” principle.
●
The programme has been extended to cover burdens generated at local
level, and there will be enhanced emphasis on dialogue with the EU (and
other member states) to promote burden reduction at the EU level. Central
and local level governments have agreed on a local contribution to the 25%
reduction target. A “zero” baseline measurement is currently being
prepared for local burdens, based on a sample of 25 municipalities.
The United Kingdom has set up a simplification programme to reduce
burdens on business, based on the SCM. A baseline of GBP 13.4 billion of
annual administrative burdens on the private and third sectors was
established in May 2005. In the autumn of 2006, the government announced
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an overall net reduction target of 25% by 2010, to be achieved across most
central government departments and some agencies.
Denmark also figures among the front runners in the area of
administrative burden reduction for business. It has used the SCM to measure
administrative burdens, and committed to a reduction of 25% between 2001
and 2010. The government has recently developed two new projects (the
“Burden Hunters” project to address irritants (see Box 2.3), and the “Ten Business
Flows” project to match its administrative burden reduction policy more
closely to real business needs.
In 2005, the federal government in Germany set the reduction of the
administrative burdens on business, citizens and public administrations as
one of the cornerstones of its Bureaucracy Reduction and Better Regulation
programme. The SCM was chosen to measure administrative costs resulting
from information obligations included in federal legislation. The target is to
reduce administrative costs by 25% between 30 September 2006 and end 2011.
The Swedish government announced a national net reduction target of
25% by 2010 of business administrative costs stemming from compliance with
information obligations in legislation, as defined by application of the SCM for
measuring administrative burdens. This was implemented in November 2006.
The Portuguese government has continued making progress with the
Simplex Programme.4 In November 2008, the Council of Ministers adopted a
resolution integrating a quantitative commitment to the Simplex Programme
and the Legislar Melhor Programme. The objective is to reduce administrative
burdens on businesses by 25% by 2012. The commitment applies to all laws,
decree laws and decrees of national origin which have an impact on the
lifecycle of businesses (creation, management, expansion, closure). It is based
on an adapted version of the SCM methodology, and its selective application
to key legislative and administrative simplification measures. The adjusted
SCM includes full compliance costs and covers burdens for citizens. It focuses
on information obligations and integrates delays and waiting times to capture
the effects of e-government initiatives.
Belgium has been measuring red tape for both businesses and citizens
since 1999. As of 2007, the measurement effort applying the SCM model was
formalised in the Kafka Measurement Office. Both ex ante and ex post impact of
new or adapted federal legislation as well as selected e-government initiatives
are being measured. As such, Belgium has a clear view on the burden impact
of all new and/or adapted legislation as it is published. Regions have also
introduced quantification (baseline measurement for selected sectors in
Flanders, pilot projects in Wallonia).
A modified version of the SCM is also being used for the measurement of
direct compliance costs in Canada. The Statistics Canada survey measured
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direct costs to a subset of Canadian businesses of complying with
12 information obligations as part of the Government of Canada’s Paperwork
Burden Reduction Initiative (PBRI). Under the PBRI, the Government
committed to reduce administrative and paper burdens on small business
resulting from government rules and regulations by 20%. On 20 March 2009,
the Government of Canada announced that it had reached its goal.
Italy adapted the SCM to its specific business structure characterised by
great heterogeneity and a very high number of SMEs. The process of
Misurazione degli oneri adminsitrativi (MOA) relies on continuous consultations
of stakeholders and public administration. The estimated savings for the first
two sectors (labour and interior) are above EUR 5.3 billion. Two additional
reduction plans (environment, landscape and cultural heritage) are soon to be
finalised.
In August 2009, the Government of New Zealand launched an ambitious
programme on cutting red tape by “reviewing existing regulation in order to
identify and remove requirements that are unnecessary, ineffective or
excessively costly”.
France launched its MRCA5 programme in 2006. It consists of four stages:
i) census of information obligations (IO), ii) selection of IOs to be measured
based on extensive consultations with ministries and stakeholders,
iii) measurement of administrative burdens in five priority areas: taxation,
social security formalities, exports, public procurement and company law, and
v) launching action plans to reduce administrative burdens in waves of
200 IOs. The goal is to reduce administrative burdens by 25%. Since 2008 this
approach has moved towards a qualitative approach focusing on life events
(see Chapter 2).
One of the most recent programmes aiming at reducing administrative
burdens on business by 25% by 2012 was launched in Finland in 2009, among
other measures, following a pilot SCM measurement of VAT legislation. The
action plan focuses on eight priorities: taxation; statistics; agricultural
subsidisation procedures; food safety and quality; employers’ reporting
obligations; financial reporting legislation; public procurement; and
environmental permit procedures. The development of e-government services
for businesses is a horizontal priority of the action plan.
A national administrative burden initiative was implemented in Austria
in 2006, initially to address burdens on businesses exclusively. In 2009, the
programme was complemented by a strategy covering burdens on citizens
(see below). Both initiatives are designed in close synergy with the
government’s e-government strategy.
Spain has established a comprehensive Action Plan aimed at revitalising
business and boosting competitiveness. The objective is to reduce
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administrative burdens on business by 30% by 2012 in six priority areas
(statistics, environment, labour, finance, hiring and companies), from a
baseline of May 2007. Good use is made of e-government in support of
simplification measures. Most of the fast track measures use ICT or the
introduction of online services.
The Irish government announced an administrative burden reduction as
part of the 25% target reduction in June 2008. This is an “add-on” to the
previously existing simplification activities.
Despite the described popularity of such programmes among civil
servants and politicians, the perception by those who should mainly benefit
from such programmes, i.e. businesses and/or citizens sometimes varies. Even
in countries where programmes of administrative burden reduction brought
significant results, businesses expressed little enthusiasm about results.
In connection with this issue, critiques emerged on the cost-efficiency of
administrative burden reduction using the SCM. While the costs of the
measurement process are relatively high, especially in the case of a full
baseline measurement, the real outcomes of the impact on society have not
been fully examined yet and are sometimes put into doubt.
Other trends in administrative simplification
Increasing the use of ICTs, process re-engineering and streamlining
Additional approaches to simplify administration exist other than the
administrative burden measurement and reduction programmes using the
SCM. Many of these exploit modern information and communication
technologies for making life of regulated subjects as well as administration
authorities and civil servants easier. Re-engineering administrative processes
and their streamlining are based on reviewing and optimising information
transactions required by government formalities, including reducing their
numbers and burdens through redesign, elimination of steps and application
of technology, as appropriate.
In the United Kingdom, ICT will be used to streamline data collection and
share it through a new reporting mechanism – the Data Interchange Hub –
which was developed by the Department for Communities and Local
Government in partnership with other departments and the Audit
Commission (the audit body for local authorities). The aim is to provide secure
and centralised data collection, storage and interchange for the local authority
national indicator set, making it easier for local authorities to report against
indicators, and ensuring that data only needs to be collected once for multiple
use by interested parties. The Hub has two main aims: reduce the data
collection burden for local authorities, and ensure that local authorities have
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the right information to gauge their own performance against national
indicators.
In Portugal, a high proportion of initiatives, and especially of initiatives
with a broad reach, relied on e-government tools. In the first two years of the
Simplex Programme, 30 of the 50 “emblematic initiatives” relied on the use or
increased use of ICT and can be described as e-government initiatives. Many
initiatives have focused on front-office-oriented processes with direct impact
on citizens or businesses. The implementation of these initiatives has largely
depended on the establishment of an integrated and coherent e-government
back office. The Knowledge Society Agency (UMIC) has developed an
interoperability platform for the public sector. When fully developed, the
platform will allow the public sector to interconnect independent systems,
and make multi-channel electronic services available.
Belgium has established a single data collection system applied between
administrations at all levels of governance – a public authority collects the
information only once for multiple users who needs it for their public mission.
Data collected by a public service has to be managed in a single database,
accessible to other public services requiring the same data. It is offered via a
service-to-service electronic transmission system, based on protected
transactions. Registers featuring data on people, companies, objects (cars) and
property have gradually become “authentic sources that are alone in being
able to gather, process, manage and provide”. This is the case with the
National Register of Natural Persons, the Cross-reference Database for
Companies, the Cross-reference Social Security Database, files concerning
social contributions and taxes, police records, etc.
The main task of the Norwegian Register of Reporting Obligations for
Enterprises is to maintain a constantly updated overview of the reporting
obligations of businesses and industries, and to find ways to co-ordinate and
simplify these obligations. The aim is to prevent the unnecessary compilation
and registration of information, particularly for small and medium-sized
companies. The Register of Reporting Obligations for Enterprises maintains an
overview of the information the various registers and agencies require from
business and industry.
In Australia, the government established a Business Process Transformation
Committee (BPTC) in 2006 to lead the reform of agency business processes.
The BPTC is a group of senior executive officers from service delivery and
central agencies, responsible for transforming the way agencies do business
through ICT. The aim of the BPTC is to reform the use of business processes
across agencies, to improve the quality, consistency and efficiency of service
delivery to citizens.
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Also in Australia, Standard Business Reporting (SBR), progressively
implemented as of July 2010, is an initiative which aims to reduce the
reporting burden by making it faster, cheaper and easier for business to report
their financial information to Australian state and territory governments. SBR
will remove unnecessary and duplicated information from government forms;
utilise business software to automatically pre-fill government forms; adopt a
common reporting language based on international standards and best
practice; make financial reporting to government a by-product of natural
business processes; provide an electronic interface to enable business to
report to government agencies directly from their accounting software, which
will provide validation and confirm receipt of reports; and provide business
with a single secure online sign-on to the agencies involved. It is expected to
save Australian business AUD 795 million per year when fully operational
in 2014.
Ten Business Flows is a cross governmental project of the Danish
government initiated by the Steering Group for Cross Governmental Initiatives.
The project has identified ten flows and mapped the process and challenges
that businesses and government authorities face when carrying out specific
tasks. The purpose of the project is to:
●
Identify ten flows/processes where businesses interact with government in
a way that is ineffective and where this contact/interaction/process can be
simplified/optimised to the benefit of business as well as authorities.
●
Develop new concepts with a focus on service, digitalisation, simplification,
re-use of data etc., and strengthening communication channels between the
public sector and businesses in order to promote digital solutions.
Mapping of the workflow in detail has proven very useful to identify new
and better solutions with less administrative costs for businesses as well as
government agencies. The ten flows have been mapped and conceptual
solutions/visions have been prepared. These solutions need to be further
developed by the relevant institutions in order to be implemented.
One-stop shops
Streamlining procedures often results in the creation of a one-stop shop,
whether physical or electronic. One-stop shops usually supply a high variety
of services ranging from the provision of information about the business
environment and its requirements, to licensing, issuing permits to enter
specific business activities. One-stop shops can also provide other services on
behalf of entrepreneurs from other public authorities. In a perfect situation,
there is only a “single window” to contact in order to access all services
entrepreneurs might apply for.
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As an example of common standardised business processes resulting in
a move towards an electronic one-stop shop, the Australian Government Online
Service Point Program has been set up to improve access to information,
messages and services on government websites through the online portal. The
website allows users to personalise their view and browsing options through
an optional online account. A single sign-on function is being piloted to allow
people to simplify the process of accessing agency services and undertaking
online transactions and not have to remember multiple websites, usernames
and passwords.
The website www.business.gov.au is an online tool and information resource
that encompasses information from all three levels of government and reduces
business compliance costs. It includes delivery of a range of free products and
services for business, including syndication of content to third party websites and
the use of Smart Forms to make it easier for business to transact online.
Box 1.2. One-stop shop in Mexico
The Mexican government, with the support of the OECD, and under the
framework of the Programme for Strengthening of Economic Competition and
Regulatory Improvement for Competitiveness in Mexico, has instrumented a onestop shop for business start-ups. The portal tuempresa.gob.mx was launched
by President of Mexico Felipe Calderon on the 4 August 2009.
This portal is an online site that allows entrepreneurs to comply with the
five federal formalities needed to legally constitute a commercial entity in a
simplified and streamlined manner. Prior to the instrumentation of the
portal, entrepreneurs needed to visit different government offices, fill several
forms and questionnaires providing the same information several times, wait
in line to submit information, and wait several hours or days to receive an
official response. With the portal tuempresa.gob.mx, entrepreneurs just fill one
single form online, and after visiting a notary or an authorised commercial
broker, they receive and can download official responses from the website.
The portal makes intensive use of e-government tools. By interconnecting
several government databases, making possible the sharing of information
between different ministries, and by eliminating the need to submit several
times the same information, the portal benefits entrepreneur by lowering
opportunity costs. OECD estimates show that administrative burdens for the
entrepreneur are reduced by 65% with the instrumentation of the portal,
decreasing from an equivalent of 16% of the GDP per capita of Mexico of 2007
to just 6% (OECD and Secretaria de Economía, 2009).
It is expected that the portal will decrease the barriers that promote the
informal economy, and will help to boost the number of new start-ups.
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Business.gov.au hosts a consultative forum for business and government
representatives twice a year to provide an update on its activities, and to
encourage the use of information technology to reduce business compliance
costs.
Many one-stop shops have been created in EU countries as the Services
Directive 2006/123 EC on services in the internal market obliges them to simplify
all procedures involved in starting and carrying out a service activity. By the end
of 2009, it had to be possible for companies providing services to complete all
necessary formalities, such as authorisation, notification, environmental
licences, through points of single contact, from a distance and by electronic
means.
In Finland, one-stop shops are being developed for citizens. The aim is to
offer public administration services centrally from a single location (one-stop
shop). This is considered especially important for Finland as a means of ensuring
a variety of high-quality services across the country, both in sparsely populated
areas and in population centres. A main goal is to expand and standardise the
range of services offered. The development of a physical citizens’ services
network will be complemented by the provision of services electronically and via
call centres. An electronic, interactive personal account for citizens will be
introduced in 2011, and the aim is also to introduce a similar solution for
businesses.
Austria has committed to establish a central e-government one-stop shop
for communicating with the public sector.6 The portal Help for Businesses
provides information and electronic procedures. In future, the Business Services
Portal will integrate information and transactional services from all levels of the
administration. It is intended as a Single-Sign-On solution as well as a
personalised one-stop shop. The government estimates that the potential benefit
amounts to EUR 100 million per year on a short term basis, raising up to more
than EUR 300 million per year, depending on the number of integrated services.
One-stop shops for businesses have been established in Spain, called
Ventanillas Únicas Empresarial (VUE). These bodies support entrepreneurs in
setting up new activities through the provision of integrated services. In
particular, the VUE system seeks to inform and orientate businesses and to
facilitate the processing of individual cases. The aim is to reduce all
procedures related to all relevant administrations into a single step. A virtual
one-stop shop portal7 has also been established, which provides general
information, as well as personalised advice on procedures related to starting
and promoting an economic activity. From June 1999 to December 2005, the
VUEs contributed to the creation of more than 36 500 companies and offered
advice to more than 162 000 persons.8 From December 2005 to end of 2009, a
further 34 500 new businesses were created and 110 000 people given advice.9
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In Germany, the Länder are contributing to administrative simplification
by developing a nationwide network of start-up agencies (so-called “Starter
Centres”), which offer start-up entrepreneurs with advice and practical
services. Enterprises in Germany can meanwhile register within a few hours
or one day at the most. Entrepreneurs setting up a limited liability company
should expect the registration process to take six days on average.
The Australian Business Number (ABN) and Business Names Registration
Project will enable businesses to apply for a national business name and ABN
online at the same time leading to significant savings in time and registration
fees for businesses operating in more than one state. The system will also
provide an interface for improved interactions between business and
government, placing information needed by business operators in one place.
In the Netherlands, several projects employ ICTs in administrative
simplification:
●
Portal Mijnoverheid.nl (mygovernment.nl) personalised a two-way exchange
of information and services with the government via Internet.
●
Electronic authentication code for access to government electronic services
such as tax declaration. Six million people already use DigiD.
●
Citizens Service Number: the government aims to use a single number in its
contacts with citizens, businesses and other government organisations.
The aim is to have one key register on citizens, so that they only have to
provide information once.
Inspection and enforcement
The issue of enforcing regulation and inspections has received more
attention over the past years, especially in connection with the use of riskbased approaches to enforcement. Examples of initiatives aiming at
improving the situation in this area were found.
The interest of some countries on the issue of inspections and
enforcement grew after the 2005 publication of the Hampton review10 in the
United Kingdom. The Hampton review sought to embed a new policy approach
to enforcement, based on proportionality and risk-based assessments to help
target resources on “high-risk” businesses that are unlikely to comply with
regulations, and reduce the administrative burdens on those that do comply.
The Regulators’ Compliance Code, a statutory code of practice which came
into force in April 2008, gives the seven Hampton Principles11 listed below a
statutory basis:
●
28
Regulators should recognise that a key element of their activity will be to
allow, or even encourage, economic progress and only to intervene when
there is a clear case for protection.
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●
Regulators, and the regulatory system as a whole, should use comprehensive
risk assessment to concentrate resources in the areas that need them most.
●
Regulators should provide authoritative, accessible advice easily and
cheaply.
●
No inspection should take place without reason.
●
Businesses should not have to give unnecessary information or give the
same piece of information twice.
●
The few businesses that persistently break regulations should be identified
quickly and face proportionate and meaningful sanctions.
●
Regulators should be accountable for the efficiency and effectiveness of
their activities, while remaining independent in the decisions they take.
The Danish government also initiated a cross-governmental project to
develop an enforcement strategy to be applied by all ministries with business
regulation, which would use a risk-based approach. The proposed strategy
combines risk-based controls, reinforced sanctioning and increased guidance
to business to promote higher compliance. It will include the elements like
overall prioritising of enforcement efforts, a differentiated control based on
businesses level of compliance, improved guidance of businesses, coordinated control across ministries/authorities, effective sanctioning
(including different types of sanctions) and systematic learning and effectevaluations of enforcement efforts.
Inspectorates and other enforcement agencies in the Netherlands now
commonly use a risk-based approach to enforcement, carrying out risk
analysis based on estimations or measurement of non-compliance and the
maximum credible effect of non-compliance, tailored to the sector in
question. Risks are prioritised in discussion with parent ministries. The
Vision for 2010 expressed in the Letter from the Dutch Minister of the
Interior and Kingdom Relations to Parliament in January 2008 rests on four
pillars: Modernisation and quality (streamlining structures, collaboration
and modern risk based approaches), Transferred tasks and clustered
expertise (more efficient reorganisation of tasks), Regulations and policy
(more flexible regulatory approach) and Government accountability
(promoting a new understanding of the limits of Government responsibility
in risk management). To give effect to the Framework Visions, an Inspection
Simplification Programme has been set up by each Ministry across its area of
responsibility that include burden measurements, a maximum of two
standard government inspections each year for SMEs in some domains,
setting up of front offices, co-operation between inspectorates and with
other regulators, transfer of task and ICT.
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Dealing with the stock, accessibility, reviews of regulation
While some countries and the EU have a policy on how to manage the
stock of legislation, it appears as a derivative of administrative simplification
in many countries. By management of the stock of legislation we mean
making the legislation more easily accessible. This includes electronic
publication, consolidation and codification of legislative texts as well as the
review of existing regulation to eliminate inconsistencies and duplications.
These projects remain usually in the shadow of more attractive projects
aiming at measuring administrative burdens.
As part of its action plan for simplification, the Walloon (Belgium)
government has charged the Legislative Committee with identifying obsolete
texts (either fallen into disuse or replaced by others). This has led the
government to repeal a first batch of 156 obsolete texts in April 2008 and a
second batch of 42 texts in June 2008 in a wide range of areas (economy and
employment, welfare, agriculture, hunting, fisheries, territorial planning).
In Ireland, regulatory simplification has been carried out through
abrogation (statute law revision), restatement, and consolidation. The process
of statute law revision is concerned with repealing legislation on the statute
book which is obsolete, spent or which has no continuing relevance. The main
objective is to provide certainty to citizens and businesses as to what
legislation from the period prior to the foundation of the Irish state in 1922
continue to apply. Statute Law Restatement is an administrative form of
consolidation, which incorporates all subsequent amendments to an act and
makes the consolidated text available in a single text without voting in the
Parliament. Another major tool for reforming law is consolidation, a process
whereby the Oireachtas (Irish Parliament) passes one overall act into which all
previous primary regulations relating to a topic are collected.
A number of legislative acts have been consolidated in Portugal
since 2006. One of the headlines of Simplex 2006 was the harmonisation and
consolidation of sets of legal rules to improve access to legislation and to
make it easier to understand. The programme included 14 initiatives focusing
on the consolidation of specific areas of law within the competence of several
ministries.
In France, codification has been an important element and a firm part of
its legislative culture for the last 20 years. Up until now, some 70 codes
covering more than 40% of the legislation in force have been created. The main
principle is rewriting and regrouping the existing legislation governing a
selected area into a single code, retaining its substance with the exception of
obsolete texts. Parliament is closely co-operating with the government in this
exercise.
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Current policies to reduce administrative burdens in Denmark can result
in the consolidation of regulations in specific areas, but only as a secondary
effect. Codification of amendments to specific laws happens in a number of
cases (such as the yearly consolidation of the Administration of Justice Act).
In 2008, 92 consolidated acts were issued. In the first quarter of 2009,
32 consolidated acts were issued.
Some OECD countries launched projects going beyond consolidation of
legislative texts and removing obsolete and duplicate regulations. These
substantial reviews of existing regulations represent a combination of
managing the regulatory stock and reduction of administrative and other
regulatory burdens.
In Italy, the process of a regulatory review has been ongoing since 2005. It
is now in its third stage of codification preceded by identification of existing
laws (including creation of a catalogue of all existing laws) and assessment of
existing laws based on impact analysis.
In spring 2009, the federal government of Germany prepared a
Simplification Act repealing some 85 acts and ordinances concerning
environmental policy. Although partly offset by newly adopted legislation, the
federal legislative stock was reduced from 2 039 laws and 3 175 ordinances to
1 728 laws and 2 659 ordinances during the 16th legislature.12 In the same
period, the number of individual regulations in force fell from 86 334 to 83 044.
The simplification efforts include the removal of approximately 950 legal
terms and concepts dating back to imperial Germany as well as regulations
predating the Basic Law which are obsolete in terms of language or substance.
In Mexico, a new substantial initiative to reduce regulatory stock was
launched by President Calderon in January 2010. Ministries were ordered to
submit lists of regulations that they considered “indispensable” by the end of
March. All regulations excluded from these lists were to be abolished. The
review will continue throughout 2010 with a more detailed assessment of
existing regulations and further cuts and simplification. OECD is assisting the
Mexican government in accomplishing this very ambitious exercise.
Regular periodic reviews of existing regulations represent another
approach to reduce regulatory stock. In 2007, the Productivity Commission in
Australia was given the task of conducting systematic annual reviews of the
regulatory burden in certain sectors. This programme operates on an ongoing
five year cycle. The process is designed to ensure that all government
regulations affecting the sectors are efficient and effective, and to recommend
improvements that lead to net benefits to business and the community,
without compromising underlying policy goals. Following each review, the
government responds to the recommendations of the reports and reforms
regulatory arrangements as appropriate.
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According to OECD regulatory management indicators, the number of
countries adopting mechanisms for regulatory review and evaluation has
evolved significantly over the last decade (Figure 1.3). Most OECD countries
now report to having mandatory periodic evaluation of existing regulation,
automatic review requirements for specific primary laws, and mechanisms by
which the public can make recommendations to modify existing regulation.
Sunsetting clauses are less popular, though still growing. Nevertheless, in the
information gathered by the OECD, it has been difficult to find concrete
examples of such policies.
Figure 1.3. Tools used to review existing regulations
2005
1998
2008
Periodic evaluation
of existing regulation mandatory
Standardised evaluation techniques
or decision criteria to be used
when regulation is reviewed
Reviews required to consider explicitly
the consistency of regulations in different
areas and take steps to address areas
of overlap/duplication/inconsistency1
There are mechanisms by which
the public can make recommendations
to modify specific regulations
Sunsetting is used for laws
Specific primary laws include
automatic review requirements
0
5
10
15
20
25
30 31
Number of jurisdictions
Data for 1998 are not available for the European Union, Luxembourg, Poland and the Slovak Republic.
This means that this figure is based on data for 27 countries in 1998 and for 30 countries and the EU
in 2005-08.
1. No data are available prior to 2005.
Source: OECD Regulatory Management Systems’ Indicators Survey 1998, 2005 and 2008,
www.oecd.org/regreform/indicators.
Portugal has recently started using revision or sunset clauses in new
regulations. For example, the industrial facilities licensing regime and the
licensing regime relating to livestock-related activities (both established
in 2008) include revision clauses.
Legislative instruments are automatically scheduled to sunset in
Australia ten years after being made, and 2013 will be the first year that
Commonwealth legislative instruments will cease under the sunsetting
provisions.
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NEW DEVELOPMENTS IN ADMINISTRATIVE SIMPLIFICATION
The new sunset clause mechanism called “Sunset for Review” was
introduced in Korea in 2009. Under this new system, regulations are to be
reviewed on a regular basis (usually every five years) and become invalid once
they are found to lack feasibility. It is applied not only to new or reinforced
regulations but also to existing ones. It is expected that about 20% of existing
regulations will be reviewed regularly under this sunset clause, which will
contribute eliminating unnecessary administrative burdens imposed by
regulations.
The Parliamentary Committee for Legislative Monitoring in Belgium is
charged with evaluating laws that have been enacted for at least three years.
It has to identify possible implementation difficulties (due to complexity,
loops, incoherence, vagueness, contradictions) and assess how the law has
effectively responded to its initial objective. Requests can be sent by a large
number of stakeholders (any administration in charge of implementing law;
any authority in charge of law enforcement; any natural or legal person; and
deputies and senators). The work of the committee is also to be fed by reports
from the Court of Cassation and tribunals on difficulties encountered with
laws and from the decisions of the Constitutional Court.
In Austria, sunset clauses are applied in some secondary regulations of
the Ministry of Economy, Family and Youth, such as those related to price
marking law.
Other methods
In addition to simply adding the obligation to measure potential
administrative burdens when creating regulation, other examples show how
to minimise paperwork caused by government regulations already in the
regulation-making process.
The United States developed a comprehensive and centrally enforced
programme to analyse and clear individual government information
collection requirements. The Paper Work Reduction Act (PRA) is intended to
minimise the amount of paperwork the public is required to complete for
federal agencies. The Act requires federal agencies to request approval from
the Office of Management and Budget (OMB) before collecting information
from the public. The OMB has the responsibility to evaluate the agency’s
information collection request by weighing the practical utility of the
information to the agency against the burden it imposes on the public.
Agencies must publish their proposed information collection request in the
Federal Register for a 60-day public comment period, and then submit the
request to OMB for review.
Rules on law making introduced in Portugal in 2006, include requirements
to consider consolidation. The Simplex Test, which also needs to be carried out
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1.
NEW DEVELOPMENTS IN ADMINISTRATIVE SIMPLIFICATION
when preparing a regulation, requires assessing the level of diversity of legal
texts relating to the material in the draft regulation. If there are more than
four laws, and the ministry does not consolidate, it must justify this
decision.
A new approach for increasing predictability and legislative certainty
for business is called Common Commencement Dates (CCDs). This
innovative solution, whereby all regulations that apply to business come
into effect on known “common dates”, comes from the United Kingdom.
Common Commencement Dates in the United Kingdom fall on just two days
a year (6 April and 1 October), and are preceded by the publication of guidance
material at least 12 weeks before new regulations with impacts on business
enter into force. During the 12-week period, businesses have time to better
prepare and adapt to the legislative changes. The objective of this approach is
to assist businesses to adapt more effectively to new regulation. Similar
approaches have been experimented with in the Netherlands.
Does public perception reflect results?
Despite the popularity of administrative burden reduction programmes
among civil servants and politicians, the perception by those who should
mainly benefit from such programmes, businesses and/or citizens, sometimes
varies. Even in those countries, where administrative burden reduction
programmes brought significant results, businesses did not express much
enthusiasm about the results.
In the Netherlands for example, the government met its goal to reduce
administrative burdens on businesses by 25% in 2007. Despite this
achievement (OECD, 2007) business is frustrated at what it considers to be
slow progress and the failure to tackle issues that really matter from its
perspective.
Reasons for this negative perception by regulated subjects may be the
following:
34
●
The absolute and relative numbers representing the burden reduction may
seem impressive when related to the whole society or the business sector in
a given country. However, when expressed in terms of individual company/
citizen, they may not represent such significant savings. Thus, billions of
euros saved by a 25% reduction of administrative burdens may be perceived
by an individual entrepreneur as cents or euros saved yearly.
●
There may be a delay in the visibility of results of removing administrative
burdens to the stakeholders. The legislation process takes time and even
when changes in regulation resulting in simplification and/or removal of
unnecessary regulatory burden are applied, the impacts may appear later
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NEW DEVELOPMENTS IN ADMINISTRATIVE SIMPLIFICATION
and stakeholders may not connect them with administrative simplification
projects.
●
Some countries or agencies may focus on easily removable red tape, for
example regulations that are obsolete and/or not actually complied with,
regulations that affect the biggest part of the regulated sector (which means
that removal of the costs they impose multiplied by the number of affected
subjects will be significantly higher). This is done just to meet the adopted
quantitative target.
●
Governments do not take into account the perception of regulations by
regulated subjects. Sometimes those regulations perceived by regulated
subjects as most irritating may not be those that are the most burdensome
concerning the result of a quantitative measurement. And vice versa,
regulations identified by quantitative measurement as the most burdensome
may be perceived by regulatees as non-important or necessary and
therefore not so irritating. Regulations dealing with obligations to provide
data for statistical purposes are a good example. Very often, regulated
subjects are not familiar with the purpose and benefits of such surveys and
the obligation to provide data is irritating to them. On the other hand, when
measured, total administrative burdens of such regulation may not be that
high, since it usually concerns only a limited number of subjects (a
statistical sample). Removal or reduction of some of these obligations may
be nonetheless welcomed by the regulated subjects.
●
Communication with stakeholders may have been neglected in the past.
The results of simplification projects, especially those with quantifiable
outcomes, such as the reduction of administrative burdens by 25%, may be
attractive for the media. On the other hand, the numbers expressing the
overall reduction in total numbers may be too abstract for individual
citizens or entrepreneurs in terms of their own benefits.
Some countries have tried to strengthen communication with
stakeholders both in the process of administrative simplification itself but
also when it comes to results of such efforts. Perception of regulatory burden
by regulated subjects is taken into account often, and qualitative criteria for
identification of potential “candidates” for reduction among regulations are
being used as a complement to the quantitative ones. These new developments
are addressed below.
The summary of current trends and experiences show that administrative
burden measurement and reductions based on the SCM or its modified
version remains the core tool to simplify administration. Other tools and
processes stand in the shadow of these efforts and sometimes present only ad
hoc activities that are not, or poorly co-ordinated with the mainstream efforts.
As the perception of beneficiaries is sometimes not sufficiently positive,
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NEW DEVELOPMENTS IN ADMINISTRATIVE SIMPLIFICATION
countries try to find ways on how to make administrative burden reduction
efforts more efficient and better accepted by stakeholders, including better
and more efficient communication. Since many countries are sharing similar
experiences, it is the right time to analyse this experience, trying to find some
common principles and policy options governments may wish to follow in the
near future.
The ongoing OECD project, “Measuring progress in regulatory reform: the
use of perception surveys in OECD countries”, aims to improve the design and
use of perception surveys so that they are useful for regulatory reform design,
implementation and communication. Among other issues, it focuses on the
challenges discussed in this chapter of understanding stakeholder perceptions,
integrating them into programme evaluation and communicating the
implications and results of regulatory reform to those affected. The project
draws on country experiences and expert views (see OECD, 2010k).
Notes
1. Footnote by Turkey:
The information in this document with reference to “Cyprus” relates to the southern
part of the Island. There is no single authority representing both Turkish and
Greek Cypriot people on the Island. Turkey recognises the Turkish Republic of
Northern Cyprus (TRNC). Until a lasting and equitable solution is found within the
context of United Nations, Turkey shall preserve its position concerning the
“Cyprus issue”.
Footnote by all the European Union Member States of the OECD and the European
Commission:
“The Republic of Cyprus is recognised by all members of the United Nations with
the exception of Turkey. The information in this document relates to the area
under the effective control of the Government of the Republic of Cyprus.”
2. The SCM Network website, www.administrative-burdens.com.
3. Shortened, however, by early elections which took place in June 2010.
4. For more information see OECD (2009), Better Regulation in Europe: Portugal, OECD,
Paris.
5. Measurement and reduction of administrative costs.
6. Unternehmensserviceportal: www.usp.gv.at/Portal.Node/usp/public.
7. The portal is a part of the “060.es” website: www.060.es/empresa-ides-idweb.jsp.
8. See www.ventanillaempresarial.org/docum_vues/datos_VUEs_31dic05.pdf.
9. The figures are provided by the Spanish government.
10. www.berr.gov.uk/files/file22988.pdf.
11. www.berr.gov.uk/files/file45019.pdf.
12. As of 6 March 2009.
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Why Is Administrative Simplification So Complicated?
Looking Beyond 2010
© OECD 2010
Chapter 2
Future Policy Directions for Administrative
Burden Reduction
Chapter 2 presents policy options in line with trends and
developments and provides policy makers with guidance on
possibilities and common mistakes to be avoided when designing,
undertaking and evaluating administrative simplification
programmes. The report finds that the focus of administrative
simplification projects should be broadened. Governments should
quantify administrative burdens and set quantitative targets for
their reduction, however quantification should be used cautiously
and complemented by qualitative methods. Administrative
simplification should be integrated and co-ordinated with other
activities in the area of regulatory reform. Efficient institutional
structures for co-ordination and monitoring of administrative
simplification projects should be created, and communication with
stakeholders must be strengthened. Last but not least, administrative
simplification efforts should be evaluated for their “value for money”.
An evaluation strategy should be developed before launching the
project.
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FUTURE POLICY DIRECTIONS FOR ADMINISTRATIVE BURDEN REDUCTION
B
ased on the experience of OECD member countries, lessons and policy
recommendations can be drawn. The following policy options represent best
practices in the area of cutting red tape and should be considered when
designing, undertaking and evaluating any administrative simplification
programmes.
Policy Option 1. Broaden and widen administrative simplification
projects
The focus of administrative simplification projects should be broadened.
Countries should consider concentrating not solely on businesses but include
also the costs of regulation on citizens and the public sector, and other costs
than the administrative ones, e.g. other substantive costs, irritants, etc.
Taking into account subjects other than businesses
In many countries, especially those applying the Standard Cost Model
(e.g. Netherlands, Denmark, Germany, EU, Czech Republic) businesses were
originally the first choice for administrative burden reduction. In some other
economies, citizens and/or public authorities were taken into account from
the beginning.
According to the 2008 OECD Regulatory Quality Indicators Survey, out of
the 30 OECD member countries plus the EU, only nine were measuring
administrative burdens on citizens, and only four on the public sector.
Apparently, measurement of administrative burdens on subjects other than
businesses is firmly connected with the measurement on businesses, as none
of the OECD member countries focus on them without focusing on businesses
at the same time.
Administrative simplification is undertaken to improve the business
environment and therefore also the competitiveness of the economy. Freeing
some of the resources that are spent by businesses on complying with
information obligations contribute directly to the economic growth, probably
more than in the case of saved resources of citizens. This explains why
businesses have been the primary focus of administrative simplification
efforts.
The perception of citizens on how successful governments are in their
fight against bureaucracy is nevertheless heavily influenced by their personal
experience. Thus, citizens’ perception of administrative simplification
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programmes may be influenced by the fact that those who benefit from the
most significant savings (in absolute amounts of money) will be large
companies.
One of the reasons why the programmes aimed at citizens and public
sector are not as successful and widely dispersed compared with the ones
aimed at businesses may be the lesser suitability of the quantitative
techniques used for measuring regulatory burdens on citizens and/or the
public sector. It is more difficult to measure the costs of time for an “ordinary
citizen”. Methodologies are being developed to tackle with this issue.
Following are some examples of administrative simplification programmes
that focus on other subjects than businesses. In Portugal, the Simplex
Programme has been aiming to reduce administrative burdens for both citizens
and businesses from the beginning. In addition, it also includes some
initiatives to reduce administrative burdens within the administration.
In the Netherlands, in 2003, the government had already added citizens
as a target group for administrative burden reduction. It made a commitment
to reduce administrative burden for citizens by a net 25% by 2007. An early
decision was to adapt the SCM methodology used for the business
administrative burden reduction programme. After the 2006 elections, the
new cabinet decided to continue the programme but in a different way, placing
more emphasis on a qualitative approach via the identification of the “top ten”
most irritating burdens for citizens, and the development of “life analysis”.
There is no new baseline measurement and a quantified reduction target is no
longer promoted. Experience in the first phase of the programme led to the
conclusion that it was important for reduction measures to be noticed by
citizens and that this was a major challenge. The research came up with a
roadmap concept, as well as a redefinition of was meant by administrative
burden, and five steps for a noticeable reduction. The five steps were to
describe the purpose (of the service); determine the position within the
relation model (how do/will citizens perceive the service from their perception
of freedom); read out of protocol and character (how does the service fit within
the relationship between the government and citizens); compare or design
(assess the extent to which the current service design fits the relationship
between government and citizen); take measures (to align the service to the
desired approach).
The “cutting bureaucracy for public services initiative” in the United
Kingdom is part of public sector reforms aimed at improving public services.
There are some synergies with business programmes. For example, more
efficient management of paperwork for immigrants helps businesses which
may want to recruit them. Inspections, targets and performance management
systems aimed at better public services have been in place for several years.
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FUTURE POLICY DIRECTIONS FOR ADMINISTRATIVE BURDEN REDUCTION
The initiative is aimed specifically at removing unnecessary bureaucracy and
empowering frontline public sector workers (such as teachers, police and
health professionals who are in direct contact with citizens for the provision
of public services) to respond better to the public. The strategy was published
in June 2007 by the Better Regulation Executive (BRE). The centrepiece is a
commitment to reduce the data and information that central departments
and agencies request from frontline workers by a net 30% by 2010. There has
been no single, systematic attempt to establish a quantified baseline.
According to the BRE, there are methodological difficulties in making a precise
calculation, and it is best to leave some leeway for a tailored approach, so that
departments can judge what is necessary or unnecessary bureaucracy (justice
and accountability, for example, require that the police keep some forms).
Instead, the BRE has agreed approaches with each relevant department for
reducing the data burdens. Some departments are calculating their burden
reduction in numeric terms, whereas others are assessing their reductions on
the basis of burdens (i.e. cost or time saved rather than numbers of datastreams).
Part of the citizen programme in the Netherlands addresses regulation
inside the administration, notably for professionals working in public services
such as hospitals and schools. Specific objectives include reducing the
amount of information that must be recorded, developing a single audit,
standardising definitions, and streamlining the benefit system. “Registration
requirements” for teachers and police will be cut back. Profiles of professionals
(akin to the citizen profiles already created) have been developed. In co-operation
with the professionals themselves, a top five of administrative burdens per
profile will be selected.
A programme was started on the reduction of administrative burdens for
citizens in April 2009 in Austria. Instead of a full baseline measurement, a
focused baseline approach targeting the 100 most burdensome information
obligations was adopted. These were selected on the basis of international
experiences, and with the help of legal officers within the relevant ministries.
The SCM methodology was adapted to the needs of citizens. Accordingly,
administrative burdens are measured in time and direct costs. The model was
enriched with qualitative elements. The completion of an information
obligation is structured in several phases (orientation, completion, etc.) and
the measured minutes are converted into “quality minutes”, while the overall
amount remains the same. This approach indicates which phases are most
annoying for citizens and thereupon aspects of service quality can be
considered in the measurement finding process. On the basis of that study,
fast-track-actions were launched in the areas of child birth; primary school
registration; marriage; single parents; people with disabilities and people
requiring care; pension; and death.
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The Agency for Simplification of the Administration (ASA) was created in
Belgium for the purpose of promoting independent businesses and its key
target was the business community but it was instructed in 2004 to
undertake streamlining initiatives for the benefit of all citizens. The current
streamlining projects are carried out regardless of the target group.
Moreover, citizens may be considered from the point of view of their specific
profiles: employees, people receiving benefits, individuals, members of a
family, etc. Projects on various themes such as people qualifying for benefits
(the disabled, people taking early retirement), civil status formalities,
registering foreigners, qualifying for tax preferences and other financial
grants have been undertaken.
The Bureaucracy Reduction and Better Regulation programme of the German
government also seeks to significantly reduce administrative costs bearing
upon the Federal administration. A number of ministries have started pilot
projects with a view to tailoring and refining the analytical and methodological
approach as the SCM cannot be applied directly.
The issue of adapting the SCM to measuring costs for other subjects was
also addressed on the international level. A Learning Team on administrative
burden reduction on citizens has been set up within the framework of the
EUPAN1 in 2008. One of the results of its work is a manual on the Standard
Cost Model for Citizens that can be used to quantify administrative burden of
citizens (see Box 2.1).
Some countries experienced problems to adopt the purely quantitative
techniques, such as the SCM, to the assessment of administrative burdens on
citizens, as it is difficult to estimate the costs of the time of citizens spent on
compliance with government regulations. They are therefore also testing
qualitative techniques that are less precise but more focused on the user of
regulation (see also Policy Option 2).
Taking into account other costs than the administrative ones
Another issue is related to the relatively narrow definition of
administrative burdens. Naturally, the administrative simplification projects
focus mostly on one part of regulatory costs – administrative costs. These are
usually defined as the costs imposed on regulated subjects (e.g. businesses),
when complying with information obligations stemming from regulation.
These costs are usually not as visible as direct financial costs (e.g. taxes) or
substantive compliance costs (e.g. costs of purchasing machinery). It is also
mostly difficult to find these kinds of costs in companies’ books.
On the other hand, these costs, especially those connected with filling in
questionnaires, are usually seen as the most irritating, connected with the
“bureaucracy” in the negative sense of the word. Fighting against these costs
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Box 2.1. Standard Cost Model for citizens
The manual SCM for citizens is one of the results of the work of the
Learning Team set up within the framework of the European Public
Administration Network (EUPAN).
The SCM for Citizens was originally developed in the Netherlands by the
Ministry of the Interior and Kingdom Relations. The method can be used to
quantify the administrative burdens of citizens and to monitor administrative
burden reduction programmes.
AB are calculated in the following manner:
● The total administrative burden of a law is equal to the sum of the Time (T)
and the Costs (C) per information obligation.
● The Time (T) and Cost (C) per information obligation is equal to the sum of
the Time (T) and Costs (C) per administrative activity.
● The time per administrative activity is equal to T × Q expressed in (hours)
and the costs per activity are equal to C × Q expressed in (€).
Time (T)
The variable time should be taken to mean the time (in hours) that it takes
a citizen to perform a certain administrative activity.
Costs (C)
The variable costs should be taken to mean the Out-of-Pocket (OOP) costs
which are costs a citizen incurs after contracting services required to satisfy
information obligations. Examples are postal or travel fees. Please note that
direct financial costs such as taxes or fees are excluded from the definition of
OOP costs.
Variable Q is calculated on the basis of two variables:
● Number of citizens (refers to the number of citizens to which the
information obligation applies.
● Frequency (the number of times that a citizen has to carry out an
administrative activity per year.)
Source: J. Hurk (2008), “Standard Cost Model for Citizens – User’s guide for measuring
administrative burdens for Citizens”, Ministry of the Interior and Kingdom Relations,
The Hague.
may be appealing for politicians. It is sometimes not easy to see the purpose
of expenditures on compliance with information obligations. While the
substantive compliance costs are usually justified by the protection of basic
values such as environmental protection or consumers’ rights, justifying
information obligations is more difficult.
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Aiming at reducing administrative costs may be supposed to be a “safe
bet”. Surprisingly enough, it has not always been the case. For example, the
Swedish Board of Industry and Commerce for Better Regulation estimated,
based on the survey “The Total Costs of Regulations to Businesses in Sweden”,2
that “for all companies, administrative costs were below 30% (9-27%, depending
on the sector)” of all regulatory costs. NNR complains that “compared with
financial and material regulatory costs, administrative costs of regulations are
only a small portion of companies’ regulatory costs and therefore the
reduction of such costs is of minor importance for businesses”. In Ireland, red
tape ranked fourth in a business survey among the biggest problems for
businesses, so it seems to be an important but not the most important issue
for companies.
One category of regulatory costs is different: irritation costs. These costs
are not objective and therefore difficult, if not impossible, to quantify.
Irritation costs can be defined as the costs that are subjectively felt by the
regulated subject as annoyance caused to him by not being able to see and
understand the raison d’être of the obligation or not being able to conform to
the objectives of a given regulation. The subjective perception of how
burdensome a given regulation is may differ from the results of quantitative
measurements. In fact, the findings of the EU baseline measurement of
administrative costs imply that “[t]he degree to which an information
obligation is perceived by business as irritating (irritation factor) is very often
uncorrelated to the administrative burdens imposed”.3 These costs are usually
captured by perception surveys (see Policy Option 2).
Many countries have realised this situation and are trying to focus in
addition on costs other than administrative ones. The UK Government
decided in 2007 to go further. The focus is now on the reduction of the policy
costs of existing regulations, defined as “the costs inherent in meeting the
aims of a regulation, for example the direct cash cost of installing a filter on a
factory chimney as prescribed by the regulation, or indirect cost such as
necessary changes in working practices”. They also address regulatory
irritants.
The Bertelsmann Stiftung, based on the experience with the project of
the German Government on “Reduction of Bureaucracy and Better
Regulation”, decided to develop a model for measuring all regulatory costs
including administrative, financial, material costs and “business as usual” and
opportunity costs. The model also takes into account the irritation costs,
however it does not quantify them. Box 2.2 provides further information.
As the examples show, there are synergies that can be explored by
adapting the techniques that exist to measure other costs as well as to focus
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FUTURE POLICY DIRECTIONS FOR ADMINISTRATIVE BURDEN REDUCTION
Box 2.2. The Handbook on the Regulatory Cost Model
The regulatory cost model (RCM) developed by the Bertelsmann Stiftung is based on the
principles of the Standard Cost Model (SCM) and develops it further. It provides a
systematic methodology for an integrated measurement of the costs arising from duties
requiring action.
Overall, the RCM differentiates between six types of duties requiring action: Information,
payment, co-operative, supervisory, training duties as well as target fulfillment and other
requirement fulfillment duties.
The costs incurred by duties requiring action can first be classified, in terms of resourceorientation, as personnel, material and financial costs. Personnel costs are determined by
multiplying the time taken by the associated hourly wage rate, whereby specific standard
processes for each type of duty requiring action are used for ascertaining the time required.
Material costs include costs for materials, incoming goods, third party services, financing
and infrastructure costs as well as depreciation and amortisation. Financial costs include
taxes and other levies such as fees.
Personnel and material costs represent business-as-usual costs, either partly or in their
entirety, if applicable. Business-as-usual costs are costs which would be incurred by the
regulation addressee even if there were no statutory duty. Additional costs, in contrast, are
costs incurred solely by the statutory duty. Financial costs in principle only represent
additional costs as the norm addressee would typically not pay taxes to the State without
the statutory duty to do so. If business-as-usual costs are subtracted from the sum of the
personnel, material and financial costs (= Regulatory Costs I), this results in the additional
costs (= Regulatory Costs II).
Finally, opportunity costs are calculated on the basis of these additional costs. Opportunity
costs are defined as profits foregone by the norm addressee due to the fact that statutory
duties had to be fulfilled and resources could therefore not be optimally implemented. For
the sake of simplicity, the RCM determines opportunity costs by calculating interest gains
foregone in one year. If the additional costs are added to the opportunity costs, the result is
the total regulatory cost caused solely by law (= Regulatory Costs III).
Besides the individual types of costs, the RCM also offers the possibility of recording the
subjective burdening of the norm addressee. The subjective burden can be seen as an
“irritation” in the sense of annoyance with the statutory duty. Overall, the RCM differentiates
between three causes for irritations: Lack of understanding, lack of fulfillment (feasibility)
and lack of acceptance of the statutory duty.
The handbook is intended to be used as a set of instruments (toolkit), i.e. according to the
epistemic interest, complexity of the measurement object, temporal and financial
resources as well as the requirements of the validity and reliability of results. The toolkit
can be used as a suitable instrument in the required intensity for determining regulatory
costs.
Source: Bertelsmann Stiftung (2009), Handbook for Measuring Regulatory Costs, Version 1.0, April.
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on other subjects than businesses. This adaptation is possible, though with
certain limitations.
When trying to reduce regulatory costs on citizens and the public sector,
countries should target their efforts and not try to make a full baseline
measurement. Quantitative methods should be complemented by qualitative
ones taking into account also the irritation factor. See the next policy option
for further elaboration on this issue.
Policy Option 2. Quantify, but cautiously
Governments should quantify administrative burdens and set quantitative
targets for their reduction, whether this is done before launching or during
the project. However, quantification should be used cautiously with the
efficiency in mind. Qualitative methods, especially those assessing the
irritation costs, should complement the quantitative ones, to better target
the efforts.
Quantification and targets
The issue of measuring administrative burdens is one of the important
questions for countries deciding on how to deal with administrative burdens.
The SCM represents the methodology that is relatively understandable and
easy to implement. The undisputable advantage of the SCM measurement is
that it helps to monetise the value of administrative burdens. The numbers
are easier to present to the media and wider public. They are also easier to
deal with in further phases of the project when opportunities for reduction are
being sought: “what gets measured gets done”. Furthermore, it also helps to
identify the most burdensome regulations that are suitable targets for
simplification. Expressing the value of the administrative burden in monetary
terms also helps to adopt quantitative targets for reduction, both general ones
as well as divided according to individual ministries, areas of regulation etc.
Experience of countries that have already measured their administrative
burdens shows that the process of measurement may be costly, especially
when the full baseline measurement is conducted (all existing regulation is
measured) and when external private companies are contracted for the
measurement phase. For example, in the United Kingdom the full baseline
measurement costs approximately GBP 10 million; the European Commission
paid for the measurement of administrative burdens in priority areas
approximately EUR 20 million. The Czech Republic represents another
approach: the measurement of administrative costs was conducted solely by
the ministries and other administrative authorities with no extra resources
being invested. There is, however, an issue of the reliability of the results of
such measurement. In Germany, the Statistical Office was involved in the
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measurement; however, additional resources were invested to finance the
measurement.
Whether the resources invested in the measurement are justified by the
quality of the data produced is a matter of discussion. Some countries argued
that the full baseline measurement is too timely and costly and focused only
on priority areas that they identified usually in co-operation with regulated
subjects, mostly businesses. The results in the countries that conducted the
measurement also prompt that the Pareto principle can be applied on
administrative burdens – 20% of regulations usually cause 80% of the
administrative burden. It may be therefore more efficient to focus solely on
these 20%, however, there is a problem of correct identification of the most
burdensome 20% of regulation. The European Commission decided that at
the EU level the full baseline measurement would be extremely costly and
it will be focusing only on the 13 priority areas that were identified in close
co-operation with stakeholders (see Box 1.1).
In Flanders (Belgium) burden measurement is done on the basis of the
20/80 rule. Departments draw up an inventory of the 20% of regulations that
cause 80% of the total administrative burden, and map information
obligations relating to these regulations. Another option is to consider the 20%
of regulations that cause burdens on 80% of the relevant target group (such as
schools). The 20/80 option is validated by the ministerial department and
Regulatory Management Unit (DWM). The work (interviews, report) is done by
DWM, with some support from consultants, and the report is discussed by the
regulatory unit of the department.
The Australian State of Victoria decided to skip the measurement phase
completely and the value of existing administrative burdens is estimated
based on Australia’s administrative burden as a percentage of GDP; and the
share of Commonwealth and State regulation in the national burden. This
approach however has been criticised as “there is no known basis for
believing” that “the level of the ‘baseline’ burdens in Australia is equal, as a
proportion of GDP, to that in the Netherlands” (see Deighton-Smith).
A simplified version of the SCM is used in Spain. The simplification has
two objectives. The first is to address simplification initiatives, results of
which cannot be measured using SCM, for example, reducing the
administration’s maximum response time. The second objective is to avoid
wearying businesses by repeatedly asking for their opinion on the processes
with the highest administrative costs, so that the burden reduction study itself
does not become an additional burden.
Even the OECD data show that the number of licences and permits may
differ substantially among OECD countries. For example, the survey on
Regulatory Quality Indicators shows that while the United Kingdom had only
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339 existing legal requirements for business licences and permits in force, in
Poland there were 35, while in Korea there were 1 767 different permits and
licences and in Austria around 31 000.4
Although it may not be advisable to fully disregard measurement, it is, for
the above reasons, highly recommended to target reduction efforts for the
sake of efficiency, i.e. to try to set priorities by identifying those areas of
regulations or those individual regulations that have the potential to be the
most burdensome and focus on them. This must be done in co-operation
with stakeholders (see Policy Option 4). Qualitative methods of assessing
administrative burdens may be also helpful (see below).
Guidelines on measurement on administrative costs should be prepared
with the fact in mind that the measurement, when too detailed, may be too
costly, especially in case of more complex regulations. Thus, preparation of
safety management systems, when disaggregated into individual information
obligations, may be impossible to measure also because non-availability of
data (see Deighton-Smith).
Related to the issue of measurement is whether to set targets for burden
reductions. A discussion on this issue was imminent in Europe when the
European Council invited the EU member states to adopt their own quantitative
targets of reduction of administrative burden on businesses.
The survey on indicators of regulatory quality shows that all but four
OECD member countries (Finland,5 Japan, New Zealand and Switzerland)
adopted targets for administrative burden reduction. Fifteen countries
adopted both quantitative and qualitative targets while six countries adopted
purely quantitative targets and six countries adopted only qualitative targets.
Targets are used so widely because they help create momentum at the
beginning and make the monitoring of progress easier. When individual
targets for participating ministries are set in addition to a general reduction
target, this creates a pressure on participating institutions to deliver results in
time. Setting of a net target is important, in order to capture burdens arising in
new regulations and to make the link with ex ante impact assessment, another
cornerstone of effective regulatory management.
While the issue of whether targets are useful seems to be answered by
the number of countries that have adopted one, there are two remaining
questions: whether the targets should be set before or after the measurement,
and on what basis they should be set. Insufficient hard data are available on
the number of countries that set their targets before or after the measurement
but according to OECD experience, most of the countries set the targets before
the measurement had been finished. Most of the countries also followed the
example of the Netherlands and set the desired reduction at 25% of the overall
administrative burden.6 It is rather a common belief that one quarter of
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Figure 2.1. Use of targets in OECD countries
1998
2005
2008
Includes quantitative
targets
Includes qualitative
targets
0
5
10
15
20
25
30 31
Number of jurisdictions
Source: OECD Regulatory Management Systems’ Indicators Survey 1998, 2005 and 2008,
www.oecd.org/regreform/indicators.
administrative costs can be diminished without hampering the substance of
regulation.7 The pioneer of setting the 25% reduction target – the Netherlands
has in the meantime decided to opt for an additional 25%.
There is no reason to believe that the target has to be set before the
measurement starts or is finished. However, as there is usually no scientific
method on using the measurement results for setting the target, and
countries usually follow the common practice, there is no evidence that
setting targets after the measurement is a better option.
In some countries, so-called “low-hanging fruit” was at the centre of
interest in the initial phase of administrative burden reduction projects. This
refers to changes of regulation that are easy to achieve because of they are not
politically controversial but nevertheless can result in significant reduction of
the administrative burden visible to the regulated subject. This approach is
usually used for “political” reasons to show some short-term effect of the
project while assessment of existing burdens and preparation and
implementation of reduction measures may take significantly more time.
There is, nevertheless, a danger hidden in this approach. First, governments
may focus on regulations that are easy to abolish because they are obsolete at
the time – either outdated or not properly enforced. If the regulated subjects
see this they may think that this is the general approach the government will
use throughout the project and it may undermine its credibility.
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A danger lies also in the fact that when a target for reduction of
administrative burdens is set, due to the focus on low-hanging fruit, a
significant part of the target can be fulfilled relatively quickly, making it more
difficult to finish the remaining part in time.
Qualitative methods of assessing administrative burdens
The basic SCM represents a technique that is purely quantitative,
expressing administrative burden in monetary terms. Some countries have
decided to use more qualitative techniques, either as a complement to the
existing quantitative ones or to replace them. Qualitative techniques do not
try to express administrative burdens in measurable terms but rather work
with information that may be subjective and is not quantifiable, but still may
represent useful input for the simplification effort. A sub-set of qualitative
techniques are the perception studies.
Some countries are developing techniques that would help to identify and
sometimes measure irritation costs. One method used more widely is the
perception survey. Perception surveys deliver information about stakeholders’,
businesses’ and citizens’ perceptions of the quality of regulations.
In 2007, the Danish government initiated the Burden Hunters Project.
This was the first step in the development of a more systematic approach
towards the reduction of irritation burdens. DCCA staff and representatives
from the line ministries visit businesses to get concrete and specific knowledge
about how they experience the interaction with government authorities and
the service provided. The Danish government presented an action plan
containing 105 measures to reduce administrative burdens on public sector
service providers expected to free up some three million working hours
annually for service provision (see also Box 2.3).
France has an approach that is also more “user-centric” than the SCM,
focusing more on “life events” (e.g. birth, business start-ups). The action plans
for administrative simplification are not based on the SCM measurement but
rather on surveys among users of regulation identifying the most burdensome
regulations. For each of life events the “path” of a user of regulation is identified
including potential ways of simplification.
The second iteration of the Canada Survey of Regulatory Compliance
Costs introduced a section of supplementary perception questions. These
covered areas such as awareness of government initiatives to reduce the cost
of regulatory compliance for small businesses, whether initiatives helped save
businesses time and/or money, the relative level of difficulty of administrative
claims/forms compared with three years ago, and where there are areas for
reform.
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Box 2.3. The Burden Hunters Project
The Burden Hunters Project is a component of the Danish government’s
efforts to reduce the administrative burden affecting Danish business. It
supplements existing red tape reduction efforts by placing particular
emphasis on the burdens experienced by enterprises, and on how other
factors besides the expenditure of time can cause enterprises to regard
business regulation as being a burden.
The Burden Hunters initiative was organised as a cross-ministerial project
consisting of a project team of 15 officials plus a steering committee
comprising decision makers from the ministries of Economic and Business
Affairs, Employment, Taxation, and Finance. The project was implemented in
co-operation with Mindlab (a development entity owned by the Ministry of
Economic and Business Affairs, Ministry of Taxation and Ministry of
Employment, whose purpose is to involve citizens and enterprises in the
development projects undertaken by these three ministries) plus external
consultants.
The project conducted in 2007-08 consisted of the following phases:
1. Definition of project focus. The target audience was defined as small and
medium enterprises. The project also focused on the total quantity of
administrative burden that these enterprises experienced. The enterprises’
business sector, size and growth ambitions were chosen as the selection
criteria. A total of six business sectors were chosen: finance, construction,
service, restaurants, hotels and cafes, industry and trade. Enterprises with
increasing sales were selected within these six sectors that ranged in size
from five to around 100 employees.
2. Learning about the users. One or two officials in the project team plus a
consultant with expertise in qualitative ethnographic methodologies
visited 24 enterprises and remained there for half a day. Their focus was on
understanding the practices of the enterprises, their relationship with the
public authorities and the challenges and experiences connected with
business regulations that they were experiencing. The visits consisted of a
mix of interviews and observations. The first three visits were used as a
pilot test. This phase showed that the recruitment of enterprises is a major
challenge in terms of the logistics of finding relevant enterprises and in
terms of persuading them to participate. One difficulty was also to
reconcile the comprehensive perspective with the need to dig deeply into
precisely how the enterprises are dealing with various requirements
imposed by business regulations. The answer to this challenge was the
selection of eight requirements which were then analysed further in a set
of flow analysis.
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Box 2.3. The Burden Hunters Project (cont.)
3. Analysis. The analysis of data was based on a model for the user-centric
innovation of public services. The analysis focused on giving an overview
of the problems faced by the enterprises in the individual areas of
regulation, and on understanding which of the enterprises’ experience in
dealing with the authorities cause the enterprises to regard business
regulations as an annoyance. The large quantity of data collected in visits
was processed using qualitative analysis software. Metadata was
systematically added to all the data collected (i.e. pictures, notes and video
clips). Results identified 28 burden areas and nine experiences that
generate irritation. All the analysis results were compiled in matrix, which
brought together all the challenges for the enterprises for each of the
major burden areas and indicated which of the nine experiences the
particular burden was associated with.
4. Idea and concept development – new initiatives aimed at reducing
bureaucracy. Innovation possibilities were identified through a systematic
review of all the data in the burden matrix. The burden matrix was used to
have an overview of all the challenges in an individual regulatory area and
an overview of the actual situations for each of the nine “irritation”
experiences. The result was the identification of 100 possibilities for
reducing bureaucracy with varying levels of detail. Examples:
❖ Possibility in the area of regulation concerned with statistics: match
reporting deadlines to the daily activities of the enterprises (such as
summer holidays).
❖ Possibility in the experience area concerned with lack of flexibility:
failure to differentiate rules and requirements in accordance with the
differing sizes of enterprises.
Further work was done to integrate the 100 possibilities into a smaller
number of possibilities and to describe how the possibility could turn into a
specific initiative relating to one three groups: 1) solutions relating to
individual authorities 2) projects that cut across the authorities, 3) concepts
that cut across the public sector.
Source: MindLab (2008), The Burden-HunterTechnique – A User-centric Approach to Cutting Red
Tape, Beskæftigelses Ministeriet, Skatteministeriet, Økonomi- og Erhvervsministeriet,
Copenhagen.
The perception of businesses towards the regulatory burden reduction in
the Netherlands is measured yearly by means of the so-called Business
Sentiment Monitor. It does not only focus on the reduction of the
administrative burdens, it includes as well the costs to comply with
regulations, the requirements of supervisory bodies and the constantly
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changing rules and legislation. The Netherlands aims to increase the number
of businesses that say that they have very little irritation from unnecessary
information obligations by 25%.
Belgium has been carrying out biennial surveys among companies
since 2000 so as to be able to reflect their assessment of the costs of the
administrative burdens they face in the three key regulatory spheres: taxation,
employment and the environment. These surveys also seek to provide better
quality information to reflect the business community’s opinions about how the
authorities and public services formulate and apply the regulations. Companies
were asked to make an assessment of the new developments, projects and pieces
of legislation, and of the projects that authorities should initiate.
In the United Kingdom, 2 000 businesses are surveyed by the National Audit
Office to measure perceptions on the government’s approach to regulating, the
most burdensome areas for businesses and the impacts of the programmes.
The Norwegian version of SCM collects qualitative data as well as
quantitative data. The surveys contain information on how burdens are felt by
those interviewed in addition to the burdens measured.
For the preparation of Finland’s national action plan to reduce
administrative burdens on businesses a study was conducted in 2007-08 to
identify the most burdensome legislative areas for businesses. As a part of this
study, a survey was carried on early 2008 among close to 3 000 SME’s on their
views and perceptions of the most burdensome legislative areas.
Qualitative techniques should be used as a complement to quantitative
ones. Qualitative techniques, while less precise, may help to identify potentially
burdensome regulations and thus more efficiently target the resources spent on
quantitative measurement. Qualitative methods also help to identify those areas
of regulations that are perceived by stakeholders as the most irritating.
Quantitative methods, however, help not only to identify the most burdensome
information obligations, but also disaggregate regulations into individual
information obligations and make it easier to spot opportunities for reduction.
Policy Option 3. Integrate administrative simplification with other
regulatory reforms and e-government
Administrative simplification should be integrated and co-ordinated with other
activities in the area of regulatory reform. It is very important to integrate ex post
simplification with ex ante assessment of regulations. Because ICTs are major
tools to simplify administration, government policies on e-government and
administrative simplification should also be closely integrated.
Administrative simplification is a general label for a set of tools used to
review existing regulation with the aim to simplify and remove existing
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administrative burdens. As described above, different approaches are used in
the general framework of administrative simplification. There is no clear
borderline between what belongs to administrative simplification and what
does not. It is therefore difficult to say whether a co-ordinated approach to
administrative simplification exists in a given country.
In many OECD countries, administrative simplification could be used
only as an umbrella term for a set of ad hoc projects that are sometimes not
systematically co-ordinated. When simplification efforts are not co-ordinated
properly, synergistic effect of various approaches may not be used fully.
Resources can also be wasted on parallel projects such as the codification of
legislative documents that are at the same time considered to be amended as
part of the administrative burden reduction programme. The institutional
structure can be one of the main factors supporting or hampering better coordination of administrative simplification efforts.
Integration between ex post and ex ante
A further step of integration is the co-ordination of administrative
simplification with other policies and instruments dealing with regulatory
quality. The most important example is integrating ex post simplification with
ex ante assessment of regulation. Significant tension can arise from
contradictory trends. On the one hand there is a demand for the reduction of
unnecessary administrative burdens. On the other hand, new regulations are
being adopted for different reasons: as a requirement from inter- and
supranational institutions; as a request at the national level for high security
and safety standards; at a political level where new regulation is sometimes
used as a benchmark to show that “something is being done”. Part of the
answer to this challenge lies in ensuring that the ex ante impact assessment of
new regulation is further strengthened with a focus on ex ante assessment of
administrative burden.
In Australia the administrative burden imposed by the Commonwealth
regulation is assessed ex ante in the Regulatory Impact Statement process and
in the analytical steps that are required which guides the analyst to consider
total compliance costs for all business for any significant regulatory proposal.
The ex ante measurement has been done in Austria since September 2007.
Overall, 561 legal provisions with 5 687 information obligations have been
analysed and measured. The approach of strengthening of ex ante assessment
of administrative costs is also used in the Netherlands, Denmark and Portugal.
This approach is also usually reflected in the institutional set-up (see Policy
Option 4).
At the federal level (and also in Wallonia and the Brussels region),
Belgium requires each new law to be accompanied by the so-called KAFKA
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test, which evaluates the administrative burden impact on businesses and
citizens. The council of ministers will not pass a new law unless it is
accompanied by this test.
Some countries have been recently experimenting with the implementation
of regulatory budgets or the “one in, one out” approach. These generally
meant that any additional administrative burdens connected with new or
amended regulations would have to be compensated with reduction of
administrative burdens elsewhere.
In addition to simplification measures, the Flemish government
introduced a compensation rule to control the flow of new burdens generated
by new regulations, which became mandatory in January 2005. Any increase in
administrative burdens generated by a new regulation (decree, order) must be
counterbalanced by an equal reduction of existing administrative burdens. An
evaluation was conducted in 2008 which showed serious implementation
problems, with no significant impact in practice. A key difficulty has been the
use of unrealistic figures.
These approaches have proven to be generally inapplicable in most of the
countries especially due to their rigor. While controlling the flow of new
regulatory burdens is necessary, there may be cases where additional
administrative burdens may be acceptable without any compensation. In
general, these are the cases where overall benefits for the society are
exceeding overall costs, including the additional administrative burdens. This
implies that it is more rational to apply full benefit-cost analyses (with enough
emphasis on quantification of administrative costs) rather than to prioritise
just one aspect of the costs overlooking potential benefits.
Integration with e-government
Process re-engineering, using ICT as well as the creation of electronic
one-stop shops show that there is more integration among administrative
simplification and e-government: ICT are increasingly used to ease the
administrative burden on citizens, businesses and public authorities. The
Dutch Interior Ministry estimates that 40% of burden reductions for citizens
are ICT related.
On the other hand, there is less evidence of closer integration of these
areas at an institutional level and at a policy development level. Often, policies
in these two areas are developed separately and therefore cannot fully exploit
the potential synergic effect.
In Japan, the department promoting e-government is the Administrative
Management Bureau (AMB) in the Ministry of Internal Affairs and
Communications. It also holds jurisdiction over streamlining administrative
organisation and method of administrative affairs.
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A number of simplification measures recently launched in Germany are
the result of synergies between the ICT and the administrative burden
reduction strategies of the federal government. Initiatives enhancing public
administration communication and simplification are presented in a
structured and transparent manner.
ICT is a key support tool for the Action Plan on Administrative Burden
Reduction in Sweden, linked to the government’s policy on ICT for the public
sector. The Action Plan assumes an extensive deployment of ICT, for example
electronic filing of documents, one-stop shops, and forms for downloading
from agency homepages.
In Slovenia, mixed project teams consisting of lawyers and information
technicians are created for the main e-government projects. The aim is that
the content is prepared as much as possible and in co-operation with
implementing institutions.
The on-line administrative service system, Government for Citizen (G4C) in
Korea offers various Internet-based administrative services such as receiving
1 200 types of paper applications, issuing 188 kinds of certificates – such as the
certificate of residence – and providing information on 71 types of registration,
for example property registration. In its upgraded version, the service items
will be significantly increased to 4 000, 2 000 and 300 types respectively.
Through these and other measures, Korea expects to save up to KRW 600 billion
in costs and public benefit effects as less time and money will be spent by
citizens’ agency visits, civil service fees, paper work and management and
public servant labour costs.
In Finland, e-government is seen as a key way to reduce administrative
burdens and, consequently, the development of e-government has been
explicitly included in the national action plan to reduce administrative
burdens on businesses, as a horizontal priority area. On the other hand, the
reduction of administrative burdens, both on businesses and citizens, is one of
the objectives of the government’s recent e-government development
measures.
It is advisable to further integrate administrative simplification and
e-government in those countries where this integration is not strong. If a
single body does not co-ordinate both agendas, there should be a systematic
co-operation between the co-ordinating bodies at least on an institutional
basis (e.g. a steering committee).
Using administrative simplification as an engine of regulatory reform
Concerns have been raised that in some countries administrative
simplification is actually displacing overall regulatory reform policies by
putting emphasis on one part only of the regulatory cycle and on a narrow part
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of all regulatory costs. During the peer review of the information submitted by
the member countries to a questionnaire on regulatory quality indicators, a
question to clarify the regulatory policy in a given country was sometimes
answered by presenting an action plan on reducing administrative burdens.
If the above presumption is correct, this could present a significant
danger to the success and credibility of regulatory reform in the given country.
Governments have to make sure that they take into account the whole
regulatory cycle. Focusing only on existing regulation, and not paying enough
attention to the flow of new regulation may become ineffective. The new,
poorly designed regulations may add more regulatory burdens to the pile
rather than reduced it.
When discussing this issue, some countries argued that even though the
long-term goal may be to have an overall regulatory policy and the necessary
regulatory quality tools, policies and institutions in place, it is more suitable to
follow the process step-by-step. J. Nijland, director of the Dutch Regulatory
Reform Group called this principle “think big, act small”. The projects on
administrative burden reduction and their success may help to put regulatory
quality in the spotlight of both decision makers as well as the stakeholders
and thus open the door for further implementation of better regulatory policy
and other regulatory quality tools.
The OECD Secretariat has tried to examine this issue by comparing the
growth in the use of administrative burden reduction among OECD countries,
the number of countries that have adopted an overall better regulation policy
and those that have adopted RIA as one of the most important tools for
regulatory quality.
The growth in administrative burden reduction, RIAs and in better
regulation policy is very similar (Figure 2.2.). As regulatory quality indicators
are based mostly on countries’ self-assessment, the value of the data may be
biased by different understandings of the term “regulatory reform policy”.
Some countries may think that having a programme on administrative
simplification is sufficient to consider adopting the overall policy. The
indicators also do not reflect the quality of the policies and tools, nor the level
of attention that is paid to some of the tools relatively to the others.
Nevertheless, this situation may lead to a conclusion that the focus of OECD
countries on various tools of regulatory quality management is relatively
balanced.
Administrative simplification should not displace other regulatory
reform tools and policies. It can be used, though, as a “foot in the door” to
create momentum and help to gain support from stakeholders for wider
reforms.
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Figure 2.2. Number of countries having a programme on administrative
burden reduction, countries requiring RIA and having explicit policy
on regulatory reform
2005
1998
2008
Explicit government programme to
reduce administrative burdens imposed
by government on enterprises/citizens
RIA is formally required by law
Explicit published regulatory policy
promoting regulatory reform exists
0
5
10
15
20
25
30
31
Number of jurisdictions
Source: OECD Regulatory Management Systems’ Indicators Survey 1998, 2005 and 2008.
Policy Option 4. Create efficient institutional structures, involve
sub-national governments
Efficient institutional structures for co-ordination and monitoring of
administrative simplification projects should be created. It is also essential
to involve sub-national levels of government.
Institutional set up for co-ordination
Different approaches to the institutional set up for administrative
simplification were sufficiently described in the previous OECD reports on
cutting red tape. In most of the countries, co-ordination is usually in the hands
of one of the ministries or a specialised agency.
In Denmark, the responsibility for the programme on administrative
burden reduction is given to the Danish Commerce and Companies Agency
(DCCA) which is inter alia responsible for companies’ registration and
administering business regulation. The Ministry of Finance and the Ministry
of Economic and Business Affairs co-operate closely in the development,
implementation and monitoring of the programme. The Ministry of Economic
and Business Affairs plays the lead role, overseeing the work of the DCCA
(which is one of nine agencies attached to the ministry, the other most
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important ones cover competition and innovation, and SMEs), and providing
progress reports to the Prime Minister. A small unit within the Ministry
supports the work, and meets at least once a week with the DCCA.
The ASA started operation in Belgium in June 1999 with the mission to
drive the policy for administrative complexity imposed on businesses. ASA’s
role is to encourage and co-ordinate simplification initiatives across
administrations. ASA is an agency in the Chancellery of the Prime Minister
with a substantial autonomy. ASA has no powers to direct or constrain other
administrations. It essentially relies on consultation and co-operation with
administrations. ASA’s tasks are formally defined as:
●
making proposals for simplification, stimulating and co-ordinating
initiatives, carrying out studies;
●
elaborating and implementing a methodology for measuring administrative
costs imposed by regulations on businesses and SMEs;
●
organising co-operation between the different federal administrations;
●
elaborating an administrative impact note; and
●
organising dialogue on administrative simplification with all levels of
authority, representative partners among self-employed and SMEs as well
as with European institutions and international organisations.
ASA has also taken on the following tasks:
●
providing legal guidance and co-ordination for several e-government projects;
●
managing the Kafka contact point (which collects suggestions for administrative
simplification);
●
establishing a dialogue with administrations over simplification projects for
citizens.
In Portugal, the Simplex Programme is under the direct political
responsibility of the Prime Minister. The Cabinet of the Secretary of State for
Administrative Modernisation (SEMA) is responsible for the programme
policy and development, with the operational support of the Agency for
Administrative Modernisation (AMA). SEMA monitors and co-ordinates the
contributions of the 15 ministries involved in the programme, as well as
providing them with guidance (for example guidance on defining priorities for
each area, identifying simplification opportunities, promoting support for the
implementation of more complex and transversal measures such as the new
industrial facilities licensing regime). SEMA sends quarterly reports to the
Prime Minister on the implementation of the Simplex programme.
Since the last report, the role of the central co-ordinating body for
administrative simplification in the Netherlands – the Regulatory Reform
Group (RRG, previously IPAL) has been strengthened. The RRG reports to the
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ministers for Finance and Economic Affairs and through them, to the Cabinet
via the Ministerial Steering Group for Better Regulation. Parliament is also
directly engaged in the programme, at least at a strategic level, through the
quarterly progress reports submitted to it by the RRG. The establishment of
The Business Regulatory Burden Commission is another significant development.
This has been set up as a channel for businesses to communicate with the
government on the issues that matter to them, so as to focus the programme
on the problems important to business itself.
In France, the Direction General for State Modernisation, which is part of
the Ministry of Public Budgets, Public Functions and State Modernisation, is in
charge of co-ordinating the administrative simplification programme.
Since administrative simplification is a cross-cutting issue that needs the
co-operation of all, or most central government bodies, the co-ordinator
should have the necessary “teeth” to put pressure on other actors to keep in
line with the targets i.e. to be placed close to or report directly to the centre of
government.
Advisory bodies
The new trend to create or to strengthen the role of advisory bodies in the
area of administrative simplification is also visible in other countries. These
advisory bodies usually have a significant level of independence and represent
external stakeholders.
In the Netherlands, part of the current Cabinet’s new strategy has been
to boost external institutional structures. There is a renewed emphasis on
the role of ACTAL as a watchdog and adviser. ACTAL will continue to monitor
the quality of assessments, and it will boost its strategic advice to the
government.
In Germany, the National Regulatory Control Council (Normenkontrollrat,
NRCC) was set up to be an independent, external advisory and control body
external to the executive in 2006. The NRCC’s mandate is to support the
federal government in reducing administrative burdens found in federal
legislation. It requires it to focus exclusively on administrative costs. Its
scrutiny therefore does not cover substantive compliance costs, direct
financial costs or so-called “irritating” burdens. The NRCC is, in particular,
involved in the preparatory phase of law drafting, before proposals are
presented to the Federal Cabinet for decision. If requested, the NRCC also
intervenes during the decision-making process, and may advise the
committees of the Bundestag. The members are representatives of business,
politics, science, the public administration and the judicial branch. The NRCC
is assisted by a Secretariat located in the Chancellery, which currently consists
of seven officials.
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After considerable discussion, Sweden decided to establish an
independent watchdog, the Better Regulation Council (Regelrådet) to reinforce
Better Regulation policy. The Council started work in January 2009. It is
modelled on the Dutch ACTAL and the German NRCC, with a mandate until
December 2010. It was set up to advise and issue statements on draft laws and
other regulations affecting businesses, and on the quality of impact
assessments, submitted by ministries and agencies.
At the EU level, the European Commission established the High Level
Group of Independent Stakeholders on Administrative Burdens. Its role is to
advise the Commission with regard to the Action Programme for Reducing
Administrative Burdens, and, in particular, to provide advice on administrative
burden reduction measures and suggest which additional pieces of existing
legislation could be included in the EU-wide measurement exercise.
In Mexico, The Federal Council for Regulatory Improvement (FCRI) plays
the role of an advisory body. The FCRI was created by law in 2000 with the
aim to foster communication between the public, private and social sectors
on regulatory reform matters. Since its creation, the FCRI, which is
composed by high-level public servants, entrepreneurs, scholars and labour
representatives, helped to develop general lines of action for “administrative
simplification”.
The government of Canada will establish a new federal Red Tape
Reduction Commission involving both Parliamentarians and private sector
representatives to review federal regulations in areas where reform is most
needed to reduce the compliance burden, especially on small businesses,
while safeguarding the health and safety of Canadians. The Commission will
be asked to provide specific recommendations on how to reduce unnecessary
regulations and make the regulatory system more effective, so that small
businesses can focus on investing and creating jobs. This approach will
provide the strong leadership necessary to produce comprehensive and
effective results.
Creation of advisory bodies has the advantage of strengthening the role of
independent watchdogs in the process of ex ante assessment of prepared
regulations as well as ex post simplification. Since they usually gather
representatives of administration together with representatives of stakeholders,
a user-centric approach is also strengthened. Too much emphasis on
administrative costs may, again, weaken the focus on other important costs as
well as the benefits of regulations. The advisory bodies should therefore
preferably oversee the quality of new or existing regulations as such and not
only from the point of view of administrative costs, and the representativeness of
various stakeholders should be well balanced.
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Interministerial co-ordination
Another interesting issue is the question of co-ordination between the
co-ordinating ministry/agency and other ministries and agencies since
administrative simplification is a horizontal topic and needs close co-operation
across administration. The power of the co-ordinating body is usually limited
and there may not be a possibility of direct action on the bodies that do not
follow the policy. Approaches differ.
In the Netherlands for example, the budget instructions contain specific
obligations to report on administrative burden reductions.8 Ministries are
threatened with budget cuts if they fail to achieve their targets. Beyond the
obvious disciplinary effect, this clear link to the budget cycle has the
advantage of encouraging decisions over how to finance burden reduction
projects such as ICT investments.
In Denmark they set up working groups to help prepare action plans
(“burden committees”). The 25% target is divided across ministries (they each
have their own target). The DCCA has no capacity of direct action on
ministries, but the Prime Minister’s commitment to simplification appears to
have put pressure on ministries. Incentives also come from the performance
appraisal of permanent secretaries, which takes account of their ministries’
progress on Better Regulation, with a bonus for good performance.
In Spain, the function of inter-ministerial co-ordination of administrative
burden reduction is handled by the Ministry of the Presidency, which has
appointed spokespersons in each Ministerial Department in order to promote
and co-ordinate reduction initiatives. The spokespersons are usually civil
servants from the Service Inspection division, which is a horizontal body. This
makes it easier for them to work with all entities within the Ministry. A High
Level Group chaired by the First Vice-President of the government leads the
process.
It is important that the co-ordinating body has enough political support
and sufficient tools to put pressure on the participating departments and
agencies. Setting individual targets is one possibility. Naming and shaming,
for example through regular reports to the government and/or parliament is
another one.
Involvement of sub-national levels
Multi-level regulatory governance is becoming important in many OECD
countries. High-quality regulation at a certain level of government can be
compromised by poor regulatory policies and practices at other levels,
negatively impacting the performance of economies and business and
citizens’ activities.
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This also applies to administrative simplification. Successful projects on
a national/federal level and the resulting reduction of regulatory burden can
by hampered by poor quality regulation or poor enforcement at the subnational level. Authorities at the sub-national levels of government are usually
the ones in regular contact with regulated subjects. If regulatees do not
see any improvement there, they will hardly recognise any improvement
whatsoever. Therefore, the involvement of and co-operation with subnational authorities should be strengthened, depending on specific conditions
of a given country.9
Even though most administrative simplification projects have originally
been designed, conducted and managed at a national level, the increasing
tendency is to take sub-national levels of government on board. Regions and
municipalities are recognised as playing an important role in reducing
regulatory burdens and improving the level of service to the business
community. There are different ways to do so, taking into account the fact that
sub-national levels of government very often have a high degree of autonomy,
and therefore central governments cannot directly impose any measures on
them. In this case, it can only create incentives to encourage those levels to
adopt their own policies or to take part in the national ones.
The simplest way is to include sub-national levels of governments into
national-level projects as partners and stakeholders. As they are often in
direct contact with the regulated subjects, they have a frontline expertise and
their contribution to identify burdensome regulation, regulation that is
difficult to understand, or irritating regulatees, etc. can be very valuable. In
addition, having sub-national levels of government involved in administrative
simplification projects can help them understand the purpose of these
projects and motivate them to be more active in implementing simplification
measures when necessary.
In Germany, there is a growing awareness of the need to look beyond
federal legislation if the overall programme is to capture all of the burdens
affecting the business community. While most legislation (up to 95% of
legislation affecting business) is adopted at the federal level, implementation
mainly takes place at regional or local levels. The federal nature of the German
state nevertheless means that any shared initiatives with the Länder are
developed on an optional, voluntary basis, respecting the competences
conferred on each authority by the law. The National Regulatory Control
Council plays an important role in co-ordinating and supporting initiatives
between the different levels of the German government to reduce
administrative burden overall. It is an integral part of joint pilot projects
carried out by the federal government and the Länder on child credit, housing
benefits and student loan legislation.
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The Danish government has established a new right for municipal and
regional public institutions to “challenge” existing rules. The right will include
both state and regional/municipal rules and requirements. A working party with
participation from the relevant ministries and regions’ and municipalities’
associations will discuss the applications for challenging rules, award
exemptions and monitor the results. At the local level, municipalities and
regions will consider challenges to local level regulation. Examples of
applications from the institutions include experiments on the day-care area
with local solutions to existing documentation and reporting tasks which
come from the day-care law or experiments on the elderly area with local
solutions concerning the Danish councils of users and relatives.
When the Belgian “Kafka contact point” receives a message in which the
municipalities are cited, the ASA forwards the message to the relevant
municipality, which is required to answer the complainants and to resolve the
issue. When a problem has a bearing on administrative streamlining and is of
a general nature, the ASA is required to make a review and may propose one
or more solutions, to be covered in a more general project. In the case of
administrative streamlining projects in which the municipalities are involved,
the ASA tries out the solutions proposed in respect of the selected
municipalities.
A higher level of involvement by sub-national levels of government lies in
making them a part of the project, meaning that some simplification
measures are directly aimed at regulations adopted at the sub-national level.
The states/regions (or in some cases also municipalities) can be given their
own reduction targets. The power of the centre to require sub-national levels
of government to reduce regulatory burden and to fulfil these targets is again,
of course, dependant on the degree of autonomy.
The centrepiece of Better Regulation at the local level in the Netherlands is
an agreement (“Bestuursakkoord”), which is made by the central government at
the start of its term of office with the Association of Netherlands
Municipalities VNG (of which all Dutch municipalities are members) to follow
up on relevant aspects of the Coalition Agreement. The current central-local
agreement requires a 25% reduction in administrative burden from
municipalities for citizens and companies. It also requires that administrative
burden between government levels should be reduced by 25%. The VNG and
central government have developed an Action Plan to give effect to this
agreement (Box 2.4).
Pioneering local authorities developed a “business effects assessment
model”. An administrative agreement was set up in June 2007 between the
central government and the local authorities. The Association of Netherlands
Municipalities (VNG) is monitoring progress in achieving the local contribution to
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Box 2.4. Action Plan for the reduction of administrative burdens
at local level in the Netherlands
Review of model regulations. Model regulations are produced by VNG when new
policies must be implemented by municipalities. Because municipalities do not
always have the judicial knowledge or capacity, VNG produces model regulations
which can easily be implemented by municipalities. Following consultation with
stakeholders, and using a form of the Standard Cost Model, the VNG has reduced
the number of model regulations from 147 to 117, including a review to make them
more “administrative burden friendly”. A number of e-forms for online use have
also been developed to promote uniform implementation by municipalities.
Central-local task force for addressing burdens generated by central government. This
brings together central Government representatives and the VNG, and is chaired
by a high profile mayor. Problems identified by the Task Force may be relayed
directly to the responsible central Government State Secretary. The VNG has
produced a list of national regulations which are seen as an obstacle to the
administrative burden reduction at a local level. The 2006 State of Local Government
report calculates that on average, municipalities receive a ministerial circular every
second working day. The baseline measurement of administrative burdens on
business showed that around 90% of the administrative burdens of municipalities
originate from tasks delegated to municipalities from the national government
based on national regulations. Only 10% of administrative burdens thus originate
from the autonomous competences of municipalities.
Simplification of central government payments to municipalities. Replacing specific
payments by central government for the execution of tasks delegated to the
municipal level by payment to a common municipal fund. Municipalities will no
longer have to report on expenditure linked to specific payments.
Website. Funded by the Interior, Finance and Economic Affairs ministries, and run
by the VNG, the website describes how municipalities can reduce the administrative
burdens for citizens and companies (“less rules, more service”).*
Consultancy funds. The possibility for municipalities to apply for a facility to
receive a small payment for hiring a consultant (it will compensate 75% of the total
costs), who can measure the administrative burdens caused by this specific
municipality and give advice on measures which can be taken to reduce these
burdens. In this way, municipalities become aware of the administrative burdens
they cause in their own municipality. This facility is financed by the ministries of
Finance, Economic Affairs and the Interior.
Top ten bottlenecks for citizens. Municipalities are involved in the top ten bottlenecks for
citizens. Pilot projects are being started in the field of volunteers and mediation. Others
will follow.
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Box 2.4. Action Plan for the reduction of administrative burdens
at local level in the Netherlands (cont.)
New baseline survey by central government on burdens for citizens and businesses caused by
local government- Interior Ministry letter to Parliament 2007.
Pioneer municipalities. A group of pioneer municipalities has been created, which is
very active in the field of reducing administrative burdens. Best practices are
disseminated on the website hosted by the VNG.
Trailblazers. There are also some 80 trailblazer municipalities involved in pilot
schemes to test whether “Lex Silencio” can be applied.
* www.minderregelsmeerservice.nl/smartsite.
the target of a 25% burden reduction. The baseline consists of two parts:
burdens arising from municipalities’ own regulations and burdens linked to
the implementation and enforcement of national regulations. The baseline
measurement based on a sample of 25 municipalities was completed in
June 2008 and the burdens at this level have been calculated to be EUR 125 million
100 million for the business community, 23 million for citizens and 10.5 million
“hours”).
Two joint projects, involving respectively four and five Länder and their
local authorities (counties and municipalities), were launched in spring 2009
in Germany with the participation of the Better Regulation Unit of the Federal
Chancellery, the National Regulatory Control Council. They have the aim of
examining the potential to simplify and optimise enforcement of administrative
regulations in three areas of the Federal Education Assistance Act. The legal
areas addressed are those of parental allowances and child benefits, as well as
housing benefits.
The Spanish central administration signed several agreements with subnational governments and formed various working groups to carry out joint
actions for administrative burden reduction and regulation improvement.
These agreements have resulted in the approval of an administrative cost
measurement system to be applied by all levels of administration, as well as a
software tool that permits to measure the economic costs generated by the
administrative burden of each regulation project up for approval. The central
government is responsible for measuring and reducing administrative costs
related to legislation with direct State origin, while the regions are expected to
take action in relation to their legislation.
Also in Belgium, co-operation between the central authorities (federal
government), the three regions and the three communities is governed by
co-operation agreements. Theme-specific inter-ministerial conferences are
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organised so as to ensure contacts are maintained. The conference members
are ministers, from all the political entities, who are in charge of the policy
being addressed by a particular conference. Collaboration agreements have
also been concluded with ministers and civil servants from all the entities to
cover specific work programmes and projects relating to administrative
streamlining and e-government. The relationship between the municipalities
and federal and regional administrations are also covered by these
agreements.
Another possibility for regulation simplification at sub-national levels is
a specific project that is managed/financed at the central level but is
focusing specifically on the sub-national level. In July 2008, the Portuguese
government launched the Simplex Autárquico Programme (Simplex for
Municipalities) to involve municipalities in the Simplex policy in areas where
both the central government and municipalities are involved (licences,
certificates, and inspections). In keeping with their autonomous status, the
Simplex Autárquico Programme is based on the voluntary participation of
municipalities. The objective is that 50% of the municipalities participate in
this initiative by 2012. At the launch of the programme, nine municipalities
had already engaged in it, including Lisbon and Porto, the two largest cities
in Portugal.
The Australian government asked the Productivity Commission (PC) to
report on the quality and the quantity of Australian business regulations and
the administrative compliance costs of business registrations. These reports
completed in 2008 cover all Australian jurisdictions and local governments.
The quality and quantity measures are intended to help compare the
performance of the regulatory regimes in the different jurisdictions and
assist governments in identifying areas for improvement. The former report
provides a “snap shot” of the current regulatory environment across the
Australian jurisdictions. To assess quality it focuses on the broad measures
of the stock and flow of regulation and regulatory activities. Measures of
good regulatory processes are used as a proxy for the quality of regulation,
rather than measures of specific regulations. The government is continuing
with the benchmarking exercises and has subsequently requested the PC to
conduct a benchmarking study into Planning, Zoning and Development
Assessments, and it is expected that subsequent reviews of other areas of
regulation will follow. In this way a wide database of regulatory costs for
various sectors will be constructed over time. It is notable that these
benchmarking exercises provide data for the comparison of jurisdictions and
do not include any specific recommendations for reform. They are intended
to inform other reviews of regulation. They also place considerable emphasis
on the processes and activities of regulators, such as provision of online
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information services for the comparison of the performance of regulators
across jurisdictions and not just the monetary costs imposed.
Other examples are the standalone project that may have been inspired
by the national level projects but were developed and managed solely at subnational levels. Success of the national-level programmes is creating a
momentum for these kinds of projects.
A number of municipalities in Portugal – especially the larger cities – have
taken some initiatives for Better Regulation. Lisbon and Oporto, for example,
have their own simplification programme aimed at improving service delivery.
The Simplis Programme launched by the municipality of Lisbon in 2008, shows
this impact. Its structure and content draw on the experience of the nationallevel Simplex Programme.
Odivelas in the suburbs of Lisbon is another good example of a municipality
which actively participates in the simplification and e-government initiatives of
central government. Azores and Madeira have launched their own policy
programme in the area of better regulation and administrative simplification in
particular. Their programmes for administrative simplification are along the lines
of the Simplex Programme, and have been closely associated with the development
of e-government. The initiatives taken by these two regional governments have
aimed at:
●
promoting and developing portals with an integrated platform of services;
●
eliminating duplicated procedures;
●
improving human resource qualifications, especially in the field of ICT.
Sub-national levels play also an important role in communicating with
stakeholders. The Dutch VNG draws attention to a number of mechanisms aimed
at ensuring that stakeholders (including administrators within local government)
are aware of, and can comment on, Better Regulation developments. A Better
Regulation website hosted by the VNG has been established (less regulation,
more service), dedicated to the dissemination of information on Better Regulation
projects at the local level.10 Efforts are made to ensure that communication
approaches are tailored to the audience: brochures, instruction manuals,
newsletters, articles in national and local newspapers, seminars, workshops,
meetings, conferences. Specific initiatives such as the reform of model
regulations and the local level’s engagement in regulatory burden reduction
programmes are discussed with local stakeholders and feedback is given to
them.
A different category of projects that result in administrative simplification in
a wider sense are projects focusing on better provision of services by the subnational authorities. These projects do not have to include changes in
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regulation and may only focus on the way the regulation is being enforced or
how regulated subjects are informed about the regulation.
Multi-level regulatory governance plays an important role in the initiative on
co-operation between the OECD and Mexico. The project will extend to examine
multi-level regulatory governance and administrative simplification more
thoroughly using the outcomes of the OECD/Mexico initiative (see OECD, 2009c).
The institutional aspect is important for co-operation between central
and sub-national levels of government. Countries use various approaches
with differing degrees of formality. In some countries, dedicated bodies were
created either to promote co-operation and involvement of sub-national
governments or to specifically deal with regulatory quality at regional and
local levels.
The Local Better Regulation Office (LBRO) was set up by the UK
Government as a lever of change for Better Regulation at the local level (based
on the five principles of proportionality, accountability, consistency,
transparency, and targeting). Its core objective is to support the improvement
of local authority regulatory services, with particular emphasis on the quality
and consistency of local enforcement. The LBRO was established on a
statutory basis under the Regulatory Enforcement and Sanctions Act 2008,
which gave it a number of powers, including the statutory power to make a
local authority a lead (primary) authority (see Box 2.5).
A Committee of State Secretaries on Bureaucracy Reduction is in place in
Germany, chaired by a Chancellery State Minister who is also the federal
government co-ordinator for the programme on Bureaucracy Reduction and
Better Regulation. The tasks of the co-ordinator and of the Committee of State
Secretaries include in particular:
●
the implementation and co-ordination of the Programme for Bureaucracy
Reduction and Better Regulation;
●
setting resolutions on uniform and binding methods for surveys according
to the SCM;
●
managing, monitoring and refining the method; and
●
mediating in case of dispute between the federal ministries and the
National Regulatory Control Council.
The closer the co-operation with sub-national levels of government is,
the more synergies can be found. Choosing the right model of involvement of
sub-national levels of government depends on the specific administrative
arrangements in a given country.
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Box 2.5. The Local Better Regulation Office (LBRO)
Mission and powers
The Local Better Regulation Office was set up by the government in May 2007, and
given its definitive statutory footing in the July 2008 Regulatory Enforcement and
Sanctions Act (the final Impact Assessment on the Act put potential cost savings at up
to GBP 80 million per year, much of the benefit through improved consistency, but also
through more effective compliance). The Act gives the LBRO six key functions:
● “Primary authority” power. The LBRO has the power to nominate and register “primary
authorities”, that is to say, lead local authorities. These nominated local authorities
provide advice to, and agree inspection plans for businesses that operate across
council boundaries. They advise other local authorities in their interaction with the
business, with a view to securing consistency of the approach. The LBRO arbitrates
any disputes.
● Advice. The LBRO provides advice to central government on enforcement and
regulatory issues associated with local government.
● Statutory guidance. The LBRO issues statutory guidance to local authorities in respect
of regulatory services.
● National enforcement priorities. It reviews and revises the list of national enforcement
priorities for the local level.
● Investment budget. It uses this budget to achieve strategic outcomes, notably the
dissemination of innovation and good practice.
● Partnerships. It develops formal partnerships (via memoranda of understanding) with
national regulators.
The LBRO defines its objectives as:
● Supporting service improvement and changes in local authority regulatory services.
● Delivering consistency, principally through the primary authority mechanism.
● Acting to improve the local authority regulatory services system.
Structure and budget
The LBRO was established as a non departmental public body (NDPB in the United
Kingdom institutional system which is operationally independent but ultimately
reports to and is funded by a sponsor department). The parent in this case is the BERR.
It must seek approval for its budget via the presentation of a corporate plan to the BERR.
It has 26 staff and a Board of eight with backgrounds in regulation, business and
government. The Chair is Clive Grace – a former local authority chief executive and
chairman of a stock-exchange listed services company. The Board sets the LBRO’s
strategic direction and acts as its ambassador. The senior management team is led by
Chief Executive Graham Russell, former head of Trading Standards and Community
Safety at Staffordshire County Council. The LBRO has a GBP 4.4 million operating
budget for its first year.
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Policy Option 5. Strengthen communication with stakeholders
Communication with stakeholders must be strengthened. They should be
actively involved throughout the process of administrative simplification.
Communication of results is crucial for their perception of how successful the
project has been.
Communication with internal and external stakeholders during the
process of simplification
When assessing administrative burdens, it is necessary to gather
information on the costs connected with complying with information
obligations. It is difficult, if not impossible, to get this data without consulting
the regulated subjects. They have the real-life experience with compliance
and are able to provide data that are closer to reality than expert assessments
by civil servants. Therefore, regulated subjects and communication with them
play an important part in the process of measuring administrative burdens.
This is, nevertheless, not the only phase in which regulatees should be
involved in administrative simplification. When identifying the “candidates”
for simplification among regulations or areas of regulation, it is always useful
to take the regulated subjects on board. The regulation that is the most
burdensome is not necessarily the one that is perceived by regulated subjects
as the most irritating, and the basic version of the SCM does not provide a tool
to deal with this issue. Focusing on the most irritating regulations may
contribute to a more positive reaction by regulated subjects on the results of
the project.
For example, in 2004 the Danish government established ten working
groups in relevant ministries (the “burden committees”), which included
representatives from business organisations. The purpose of these
committees was to identify the business community suggestions for
simplification.
Interviews by the Dutch RRG are being used to collect information on
burdens as they are experienced by business in practice, including irritants.
The perception monitor is a policy instrument that measures noticeable
changes in regulatory burdens experienced by all entrepreneurs (macro-level)
and by individual entrepreneurs (micro-level). Both levels will be monitored
over a period and the changes in experience will be analysed and explained in
progress reports.
Also in the Netherlands, the “Kafkabrigade” initiative is based around a
group of experts who seek to solve problems in the public sector from the
perspective of citizens. There is a brief investigation into a specific problem,
and how it is handled by the government. Civil servants are involved in this
process. An appraisal review is then conducted with the authorities involved,
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after which the Kafkabrigade formulates recommendations for improving the
way the system works.
The French DGME co-ordinates a network of representative bodies for
each segment of clients (e.g. associations of consumers). These networks
are provided with the results of the surveys and can discuss and give
suggestions on the areas of simplifications. Workshops are organised
several times in a year, in order to discuss the simplification projects. In
addition, there is a website dedicated to the whole simplification process, 11
using web 2.0 technologies, in which users can consult the programme, vote
on proposed measures and make suggestions. This helps define quick win
projects. To improve the efficiency of the listening process, the DGME has
established a panel, composed of 5 000 individuals and 2 800 businesses. This
panel allows the DGME to conduct the surveys in a more responsive, more
reliable and less expensive way.
In Canada, approximately 30 000 SMEs plus 5 000 external service
providers12 were contacted for information on the time and salaries spent
internally complying with information obligations. The Advisory Committee
on Paperwork Burden Reduction was also established to find practical and
achievable ideas for reducing burdens on small businesses and to measure
and benchmark paperwork burdens.
In Germany, the programme on administrative burden reduction is based
on the active and continuous participation of stakeholders (business
associations, social partners and economic research institutes), both in the
identification and costing of information obligations in current legislation and
in the development of options for simplification.
Since 2008, the Spanish government signs annual co-operation
covenants with the Spanish Confederation of Business Organisations, the
Spanish Confederation of Small and Medium-sized Enterprises and the
Spanish High Council of Chambers of Commerce. These covenants enable
these organisations to inform the government of their needs and concerns
and pass on proposals for simplifying paperwork and reducing burdens in
order to facilitate their activities. Through this activity, a large number of
administrative burden reduction proposals elaborated by businesses
themselves has been collected.
In the United Kingdom, the government has established a website which
encourages stakeholders and their representatives to submit ideas for
simplifying regulation or reducing administrative burdens. Departments must
respond to these ideas within 90 days. Those ideas that are adopted feed into
departmental simplification plans. The Better Regulation Executive (BRE) also
has a business visits programme which involves BRE staff regularly visiting a
diverse range of stakeholders and audiences, in every region of the United
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Kingdom, to understand their regulatory concerns. This intelligence is used to
inform BRE policy making and, where appropriate, is communicated to the
relevant officials.
The ongoing participation of business representatives is considered an
essential element in both the elaboration and implementation of the
measures in Austria. The Austrian Federal Economic Chamber defines itself as
an active partner in applying the SCM in the impact assessment process.
According to the regulation on the application of the SCM, an expert
commission has to assess the estimated administrative burdens if they are
likely to exceed EUR 1 million. The expert commission consists of the main
stakeholders, i.e. experts of the Chamber. Often, the Chamber is asked on an
informal basis to provide its expertise in estimating administrative burdens
for enterprises.
Communication of results
Communication with stakeholders may be crucial not only for achieving
the goals of administrative simplification projects since regulated subjects are
the only ones who can provide reliable data on complying with information
obligations. It is also very important after achieving those goals, as perception
of importance and usefulness of these projects by regulated subjects play an
important role in the overall evaluation of their success.
Some countries such as the Netherlands realised this after achieving
their objectives set in administrative burden reduction projects. The reaction
of those who should have benefited the most – the businesses – was less than
enthusiastic. Later, the government identified insufficient communication as
one of the reasons. The Dutch RRG Communication Plan explains that “the
success of the programme will depend in part on the manner in which results
are communicated to the business community. Only those companies and
individual entrepreneurs who are aware of a positive change will be able to
adapt their business processes accordingly and appreciate the differences in
the longer term. The visibility of the changes can be enhanced by effective
communication”.
The Dutch Government is addressing business concerns with its
expanded definition of compliance costs, and a new communication strategy.
As well as the ongoing work to expand the scope of the programme with a
methodology that includes irritants and broader compliance costs, and the
quality of services, its new highly proactive communications strategy targets
needs as identified by business rather than civil servants. This includes the
establishment of the Wientjes Commission to be the voice of business, and a
wide range of tailored mechanisms to capture business interests as well as to
communicate meaningful achievements (what the recipient wants to know,
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rather than what the civil servant thinks is interesting). The Regulatory
Reform Group’s (RRG) communication handbook underlines that concrete
results must have been achieved before they are communicated.
Different strategies have been elaborated to take account of the different
sectors of the business community. The aim is to answer the question for
businesses “what is in it for me?” by presenting case studies. The challenge is
to translate general results from the programme into concrete cases for the
individual entrepreneur. The plan provides for a range of communication
channels to capture business views directly and to communicate results:
●
A single central website has been set up by the RRG to be the hub of all
communications for the business community.13 All of the results of the
programme are published here (including for example the regular RRG
reports to Parliament). A contact point has been established on the site,
where businesses can submit their complaints regarding regulation
(including nuisance factors). This information is picked up by the RRG
account managers who pass on the issue to the relevant Ministry, who must
report back within four weeks on what has been done. To satisfy the
Common Commencement Date principle of timely and clear provision of
information, relevant websites provide companies and institutions with
timely information about prospective relevant regulations.
●
Regular discussions are held with representative organisations.
●
The compliance costs monitor and the perception monitor carried out by
the RRG provide the programme with new concrete issues.
●
The Minister and State Secretary of the Ministry of Economic Affairs have
both “adopted” companies with the goal of better understanding the dayto-day problems of companies. Contact is made twice a year.
●
There are campaigns with radio spots on business news radio, advertisements
in business magazines, and online advertisement (banners) on other
websites.
●
Brochures, fact sheets on specific subjects have been produced for
intermediaries such as accountants.
●
Newsletters, news feeds are uploaded on the website.14
●
“Regulatory Navigators” provide business with information on all of the
regulatory obligations for their sector.
●
In 2008 an advertising campaign was held, with magazine ads, brochures
and radio spots, drawing attention to noticeable burden reductions.
Interviews in Denmark as part of the EU15 project show that while
businesses support the burden reduction policy, they do not have a positive
perception of its actual impact on their activity. Denmark has developed
new initiatives on communication, in particular with the release of a
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De-bureaucratisation Plan for Business Regulation, which explains how the
government intends to meet the 25% reduction target. The government
provides detailed information on the administrative environment, in
particular through its business portal virk.dk. The DCCA publishes general
information on the programme on its website. It has also set up a dedicated
website on burden measurement,15 which displays a barometer of burdens,
showing progress both at an aggregate level and ministry by ministry.
The “Kafka” brand has been a useful instrument for communication both
within the administration and to the general public in Belgium. This is a wellknown initiative, which has also gained visibility outside the country. The
Kafka Measurement Office publishes the so-called cahiers, specific analyses
based on executed measurements, where a specific subject matter is analysed
more in detail. In 2009, the cahier on Mobility and Transportation was
developed, in which five years of burden reduction initiatives in the area of
Mobility and Transportation at the federal level were quantified and
commented upon.
The government has given a lot of attention to communication on Better
Regulation policies in Wallonia. One of its nine key principles for administrative
simplification is: “You have simplified something: let it be known!” It has
accordingly put in place different tools to communicate its Better Regulation
policies to both the administration and external stakeholders.
In the United Kingdom, the National Audit Office (NAO) suggests that
efforts to engage more directly with businesses rather than taking a civil
servants’ view of what matters has borne some fruit, even if there is further
progress to be made. According to the United Kingdom response to the OECD
questionnaire, “the importance of ‘real-life’ case studies to bring the
programme to life, with quotes from businesses and business organisations
has proven very helpful”. The overall savings figure delivered by the
programme is used as a key fact in most of the media communication
materials and activities and used as a central piece of evidence of the
government’s commitment to, and progress with, regulatory reform. This
includes, for example, the individual case studies, profiling how specific
businesses have benefitted from the programme; the specialised website,
which showcases the impact of the programme; and a longer term drip feed of
positive stories and case studies throughout the year, generated by other
specific/related activities, for example business visits.
In Austria, examples of individual entrepreneurs and how administrative
simplification has helped them in particular are used to promote administrative
simplification among small businesses and individuals.
It is advisable to develop a communication strategy as part of the planning
phase of the project. The consultation process must be as transparent as
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possible and regulatees’ suggestions must be assessed carefully (including a
clear expression of why they could not be taken on board). If not, their
confidence in the administrative simplification process will be undermined.
When communicating results, individual examples and case studies should
be used rather than total numbers and overall savings.
Policy Option 6. Assess programmes’ “value-for-money”
Administrative simplification efforts should be evaluated for their
“value-for-money”. An evaluation strategy should be developed before
launching the project. It should not only focus on the quantification of
administrative burdens reduced as a result of the project but also on other
outcomes and effects for society.
Many countries have acquired several years of experience with launching
and implementing their administrative burden measurement and reduction
programmes, but the same cannot be said for the ex post evaluation of those
programmes. Inevitably, pressure on them increases to justify the rationale,
illustrate the results and assess the effectiveness of their strategies.
Despite their popularity and political attractiveness, and the considerable
resources invested in them, programmes have not been perceived as bringing
sufficient concrete relief. There is broad dissatisfaction with the effectiveness
of the programmes, and the “value-for-money” of the overall agenda is put
into question. In addition, some of the evaluations that have been published to
date (by the Dutch Court of Audit and the UK NAO) have cast some doubt on the
real relief achieved by the national reduction programmes (see Radaelli, 2007).
The ex post evaluation exercise needs to look beyond the achievement of
the target set by policymakers and analyse the real outcome of the programme
in terms of social welfare and industry competitiveness. In addition to the
soundness of the methodological choices adopted during the measurement,
an ex post evaluation should ensure that the reduction measures adopted:
do not create additional sources of cost for businesses, while reducing
administrative burdens; do not increase costs for other agents, such as
consumers or public authorities and do not eliminate even greater benefits
generated by the information obligation that has been eliminated/simplified.
One of the rare examples of such evaluations comes from the Netherlands.
The Dutch National Court of Audit carried out two evaluations of the
administrative burden reduction programme, in 2006 and again in 2008. The
2006 report noted that there is an effective steering mechanism, with the
Cabinet behind the programme, a uniform and well-designed policy to
measure burdens within a clear timeframe, but that the effects on companies
have not been as anticipated. Its 2008 report noted that it was too early to
make complete comments on the then new Action Plan, but that the
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programme had been redirected to take greater account of company views,
and that there should be an expanded definition of compliance costs.
T h e U K N a t i o n a l Au d i t O f f i c e h a s p u bl i s h e d a rep o r t o n t h e
administrative burden reduction programme. Results show that burdens are
perceived to have increased and departments find it hard to deliver. However,
the government should also focus on outcomes, and the programme should
not only address administrative burden. The programme bears a cost, even
though it is difficult to quantify what resources were spent to bring the
programme forward within departments. The preliminary conclusion of the
NAO is that the benefit of the 25% reduction target to business is uncertain
and departments should not be driven exclusively by the need to meet this
target. In the second year of operation, the NAO found that business
perceptions of the government’s approach to regulation had improved. The
NAO has emphasised the need to develop and maintain a consistent method
for calculating the monetary value of burden savings, to record the costs of the
programme to the government to ensure value for money and to measure the
costs of new regulation to achieve a net target.
The Danish programme for administrative simplification has been
evaluated on several occasions. In 2007 there was the evaluation by the
National Audit Office of Denmark (NAOD) of the impact of Better Regulation
and simplification. The NAOD found that the measurable effect of efforts has
been relatively low and that a considerable percentage of companies do not
perceive administrative reductions.
In Italy three sets of indicators are used to evaluate administrative
simplification:
●
Implementation indicators which aim at monitoring the progress made in
the administrative burdens reduction activities and indicates the percentage
realisation of each measure.
●
Results indicators which aim at giving account for the effective realisation
of the specific targets of each measure.
●
Impact indicators which aim at assessing the benefits for users of
regulation.
The evaluation exercise should be timely and continuous. The best way to
organise an evaluation process is not to focus on a specific point in time, but
to establish a continuous mechanism of monitoring and evaluation. After the
measurement exercise has been completed, there should be an initial
progress report which contains: i) an evaluation of the way in which the
measurement has been designed and implemented; and ii) suggestions for
translating the measurement results into concrete reduction proposals, based
on an evaluation of the likely accuracy of the measurement. During the
“reduction period”, there should be annual interim evaluation reports based on
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FUTURE POLICY DIRECTIONS FOR ADMINISTRATIVE BURDEN REDUCTION
clear indicators, aimed at assessing the effectiveness and efficiency of the
reduction proposals. One year after the end of the reduction period, there
should be an ex post evaluation of the effectiveness, efficiency, proportionality,
actual perceived impact and macroeconomic impact of the reduction
programme, based on clearly identified indicators.
Figure 2.3. Monitoring and evaluating simplification programmes
Ex post evaluation
of effectiveness,
efficiency, proportionality,
actual perceived impact
and macroeconomic impact
Annual interim evaluations
of the effectiveness and
efficiency of reduction
proposals
Evaluation of design
and implementation
of the measurement
programme
0
time
Measurement period
Reduction period
Evaluation period
Source: Allio/Renda, Evaluation of Administrative Burden Reduction Programmes.
Another key issue in setting up the context for evaluation of simplification
programmes is deciding who should be in charge of the evaluation. When it
comes to assessing the proportionality of the measurement programme,
which includes the assessment of what resources have been spent and how,
audit offices and courts appear to be the most appropriate bodies. As concerns
the effectiveness and efficiency of the reduction proposals, the most
appropriate bodies may be regulatory reform units in charge of quality
assurance and oversight of the impact assessment process. Alternatively,
ad hoc advisory bodies may be entrusted with the scrutiny of the government’s
activity. As regards the final evaluation, the body in charge of adopting the
final evaluation report should ideally be an ad hoc body in charge of
scrutinizing the government’s activity. At this final stage of the evaluation
process, an external expert study could be considered, especially in order to
validate the assumptions concerning the macroeconomic impact of the
reduction proposals.
An ex post evaluation exercise should aim at assessing whether the
reduction programme has brought benefit to the regulatory addressees and to
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FUTURE POLICY DIRECTIONS FOR ADMINISTRATIVE BURDEN REDUCTION
society as a whole. Embracing a comprehensive approach to evaluation, in this
respect, means that evaluation should go beyond the mere scrutiny of strictly
cost-reduction measures. More precisely:
●
All possible organisational impacts should be an integral part of the
analysis, including i) faster and more transparent decision-making;
ii) better implemented, enforced and durable legislation; and iii) a new
administrative culture based on a client-oriented approach.
●
Economic impacts should be a core component of the evaluation exercise.
Accordingly, evaluators should consider designing and carrying out a
holistic, comprehensive evaluation, which integrates a series of equally
important tests. Such tests should cover: i) the proportionality criterion
(Step 1); ii) the effectiveness and efficiency criterion (Step 2); iii) an
assessment of the “perceived outcome” (Step 3); and iv) an assessment of
the macroeconomic impacts (Step 4).
Allio/Renda in their paper developed a 4-step evaluation of a simplification
programme (see Annex B.2). This could be used as a template for evaluating
country efforts on cutting red tape.
The overall impact analysis of simplification projects should be
systematically conducted, preferably before they are adopted and implemented.
This will prevent adoption of such proposals where reduction of costs does not
justify elimination of benefits by these proposals.
Notes
1. European Public Administration Network.
2. NNR Regulation Indicator 2008, NNR, Stockholm.
3. Communication from the European Commission to the Council and the European
Parliament – Action programme for Reducing Administrative Burdens in the EU,
COM(2009) 544 final, Brussels 2009.
4. These data were not used in the final report and therefore not peer-reviewed nor
checked with the countries. They are used here only as an illustration on how
numbers can differ substantially across OECD.
5. The 25% target was adopted in 2009 in Finland.
6. Exemptions do exist, e.g. The Czech Republic with 20% or Spain with 30%.
7. It is questionable, though, whether the same targets are rational for economies
with different characteristic. As shown above, the level of administrative burdens
may differ across counties and therefore the level of “feasible” reduction may be
different.
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FUTURE POLICY DIRECTIONS FOR ADMINISTRATIVE BURDEN REDUCTION
8. They must report twice a year, linked to their budget reporting cycle, including a
statement of expected increases and reductions respectively over the four year
Cabinet period, and explain deviations from previous reports.
9. In some countries, regulatory powers of sub-national governments are relatively
insignificant. Efforts should then rather be focused on the improvement of
services provided by these levels of the administration.
10. www.minderregelsmeerservice.nl/smartsite.
11. www.ensemble-simplifions.fr.
12. External providers include accountants, payroll firms and bookkeepers.
13. www.antwoordvoorbedrijven.nl (answer for businesses).
14. www.minez.nl.
15. www.amvab.dk.
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Why Is Administrative Simplification So Complicated?
Looking Beyond 2010
© OECD 2010
Conclusions
A
dministrative simplification is likely to remain among the most important
government agendas in the following years. Many countries and the European
Commission will finish projects on measurement and reduction of
administrative burdens. This will be the right time to deeply evaluate these
projects and, based on these evaluations, decide where to go next.
It is highly probable that these initiatives will not appear to be as
successful as was envisaged few years ago. The perception of the beneficiaries
– businesses and citizens – will probably not be so positive and the public will
keep complaining about the high level of government bureaucracy and too
much red tape. This does not mean however, that the efforts to simplify
administration should be condemned and abandoned.
According to a pessimistic scenario, negative opinions will prevail and
governments may significantly limit future efforts to cut red tape through
systematic methods.* Depending on how fast sustainable growth of the
economy will be re-established, pressures for strengthening of the role of the
state in regulating the economy may intensify. It will be difficult for reformoriented politicians and officials to defend relatively costly projects on
measuring administrative burdens which are perceived by some as weakening
the ability of government to regulate society in order to defend core values and
to effectively protect its citizens. Abandoning systematic efforts to simplify
regulatory environment governments would, however, contribute to losing
competitiveness. Those that cut programmes instead of burdens could fall
behind countries which continue to invest in regulatory reforms.
In the optimistic scenario, countries will focus on re-boosting economic
growth and strengthening their competitiveness using improvement of
regulatory environment and reduction of unnecessary administrative costs as
an important instrument in this effort. Administrative burden reduction
projects, their popularity and momentum that they are creating could be used
as a “foot in the door”, creating space for more comprehensive regulatory
reform strategies.
* For example, the Financial Mail from 21 March 2010 quotes sources close to the UK
Administrative Burdens Advisory Board: “Cutting red tape has not been dismissed
completely by the Government but, inevitably, there are other priorities.”
81
CONCLUSIONS
Administrative simplification projects must be thoroughly evaluated,
first to prove that they are really beneficial not only for some of the regulated
subjects (especially the big companies) but for society as such. Their effects on
economic growth, creating jobs, enabling innovations, etc. must be clearly
shown to persuade the decision makers and the stakeholders on their
usefulness. Second, the evaluation should serve the purpose of adjusting the
methodologies on simplifying administration to bring the best “value for
money”. The OECD represents a suitable platform with expertise and
experience for detailed and impartial assessment of projects on cutting red
tape.
As shown above, to make administrative simplification more successful
and better-received by the stakeholders, administrations must not only
concentrate on hard data coming out of the measurement process but must
also take into account the subjective perception of regulated subjects towards
regulations and also focus their efforts on those areas of regulations that are
perceived as the most irritating. Governments should also, through perception
surveys, regularly assess the perception of regulations among business and
citizens and set improving this perception as one of the goals of regulatory
reform.
One way to reach this goal is to strengthen communication and co-operation
with the stakeholders. They should be actively involved in the design of
administrative simplification projects and contribute to the identification of
the areas of focus for these projects. The wider public must also be
continuously informed about the benefits these projects have. The methods
adjusted to the purpose of communication and the constituency must be
used.
Furthermore, administrative simplification and ex post reviews of existing
regulations must be integrated with ex ante assessment of newly developed
regulations. Creation of independent advisory bodies bringing together
representatives of governments and outside stakeholders, one of the results of
administrative simplification, can contribute to further strengthening of
independent scrutiny of new regulations. The mandate of such bodies must,
nevertheless, be sufficiently wide, relating not exclusively to administrative
burdens.
Countries should also develop projects that will concentrate not only on
businesses but also citizens. With pressure to improve the performance of
administrations and “doing more for less”, projects focusing on reducing
administrative costs and regulations inside government can contribute to
meeting these demands.
The countries that have not yet started with the systematic simplification
of their regulatory framework should use the experience of countries that can
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CONCLUSIONS
be considered as pioneers in the administrative simplification area while
designing their own programmes on administrative burden reduction, better
targeting their efforts to the most burdensome and irritating regulations,
designing comprehensive communication strategies before launching the
projects and creating permanent monitoring and evaluation mechanisms.
In the future, the OECD should continue in its effort to analyse new
trends and developments in the area of administrative simplification. The
OECD will also continue, subject to interest of the member countries, to review
administrative simplification in both member and non-member countries. An
evaluation framework presented in this paper will be tested and adjusted as
part of these evaluations. A more comprehensive, analytical report shall be
launched in a horizon of five years to map the new developments and present
further policy options. In the following years, several short papers on specific
tools and narrowly defined areas (e.g. Common Commencement Dates,
enforcement and inspections, etc.) could be prepared based on case studies in
several carefully selected countries.
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Why Is Administrative Simplification So Complicated?
Looking beyond 2010
© OECD 2010
ANNEX A
Policy Options
Policy Option 1. Broaden and widen administrative simplification
projects
The focus of administrative simplification projects should be broadened.
Countries should consider concentrating not solely on businesses but include
also the costs of regulation on citizens and the public sector, and other costs
than the administrative ones, e.g. other substantive costs, irritants, etc.
There are synergies that can be explored by adapting the techniques that
exist for administrative burden measurement to measure other costs as well
as to focus on other subjects than businesses. When trying to reduce
regulatory costs on citizens and public sector, countries should target their
efforts and not try to make a full baseline measurement. Quantitative
methods should be complemented by the qualitative ones taking into account
also the irritation factor.
Policy Option 2. Quantify, but cautiously
Governments should quantify administrative burdens and set quantitative
targets for their reduction, whether this is done before launching or during
the project. However, quantification should be used cautiously with the
efficiency in mind. Qualitative methods, especially those assessing the
irritation costs, should complement the quantitative ones, to better target
the efforts.
Although it may not be advisable to fully disregard measurement, it is
highly recommended to target the reduction efforts for the sake of efficiency,
i.e., to try to set priorities by identifying those areas of regulations or those
individual regulations that have the potential to be the most burdensome and
focus on them. This must be done in co-operation with stakeholders (see Policy
Option 4). Guidelines on measurement on administrative costs should be
prepared with the fact in mind that the measurement, when too detailed, may
be too costly, especially in case of more complex regulations.
87
ANNEX A
Qualitative techniques, while less precise, may help to identify
potentially burdensome regulations and thus more efficiently target the
resources spent on quantitative measurement. Qualitative methods also help
to identify those areas of regulations that are perceived by stakeholders as the
most irritating. Quantitative methods, however, help not only to identify the
most burdensome information obligations, but also to disaggregate
regulations into individual information obligations and make it easier to spot
opportunities for reduction.
Policy Option 3. Integrate administrative simplification with other
regulatory reforms and e-government
Administrative simplification should be integrated and co-ordinated with
other activities in the area of regulatory reform. It is very important to
integrate ex post simplification withex anteassessment of regulations.
Because ICTs are major tools to simplify administration, government policies
on e-government and administrative simplification should also be closely
integrated.
It is more rational to apply full benefit-costs analyses (with enough
emphasis on quantification of administrative costs) on new regulatory proposals
rather than to prioritise just one aspect of the costs overlooking potential
benefits.
It is advisable to further integrate administrative simplification and egovernment in those countries where this integration is not strong. If a single
body does not co-ordinate both agendas, there should be a systematic cooperation between the co-ordinating bodies at least on an institutional basis
(e.g. a steering committee).
Administrative simplification should not displace other regulatory
reform tools and policies. It can be used, though, as a “foot in the door” to
create momentum and help to gain support from stakeholders for wider
reforms.
Policy Option 4. Create efficient institutional structures, involve
sub-national governments
Efficient institutional structures for co-ordination and monitoring of
administrative simplification projects should be created. It is also essential
to involve sub-national levels of government.
It is important that the co-ordinating body has enough political support
and sufficient tools to put pressure on participating departments and
agencies. Setting individual targets is one possibility. Naming and shaming,
for example through regular reports to the government and/or parliament is
another one.
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Creation of advisory bodies has the advantage of strengthening the role of
independent watchdogs in the process of ex ante assessment of prepared
regulations as well as ex post simplification. Since they usually gather
representatives of administration together with representatives of stakeholders,
a user-centric approach is also strengthened. Too much emphasis on
administrative costs may, again, weaken the focus on other important costs as
well as the benefits of regulations. The advisory bodies should therefore
preferably oversee the quality of new or existing regulations as such and not
only from the point of view of administrative costs, and the representativeness
of various stakeholders should be well balanced.
The closer the co-operation with sub-national levels of government is,
the more synergies can be found. Choosing the right model of involvement of
sub-national levels of government depends on the specific administrative
arrangements in a given country.
Policy Option 5. Strengthen communication with stakeholders
Communication with stakeholders must be strengthened. They should be
actively involved throughout the process of administrative simplification.
Communication of results is crucial for their perception of how successful the
project has been.
It is advisable to develop a communication strategy as part of the planning
phase of the project. The consultation process must be as transparent as
possible and regulatees’ suggestions must be assessed carefully (including a
clear expression of why they could not be taken on board). If not, their
confidence in the administrative simplification process will be undermined.
When communicating results, individual examples and case studies should be
used rather than total numbers and overall savings.
Policy Option 6. Assess programmes’ “value for money”
Administrative simplification efforts should be evaluated for their “value for
money”. An evaluation strategy should be developed before launching the
project. It should not only focus on the quantification of administrative
burdens reduced as a result of the project but also on other outcomes and
effects for society.
The overall impact analysis of simplification projects should be
systematically conducted, preferably before they are adopted and implemented.
This will prevent adoption of such proposals where reduction of costs does not
justify elimination of benefits by these proposals.
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ANNEX B
Evaluating Administrative Burden Reduction
Programmes and their Impacts1
Introduction
Administrative simplification, cutting “red tape”, and purpose of this
paper
Since a couple of decades, OECD countries have embarked on a series of
structural reforms targeting the way public administrations organise
themselves and deliver. In this context, administrative simplification
strategies seek to rationalise and streamline the bureaucratic machinery, and
enhance the efficiency of its procedures. It is therefore one of the most
diffused approaches to cope with the costs of regulatory inflation. “Cutting red
tape” forms integral part of such strategies. The term red tape is generally
used to refer to administrative burdens (ABs), i.e. “regulatory costs in the form
of asking for permits, filling out forms, and reporting and notification
requirements for the government” (OECD, 2006, p. 17). These can be harmful if
they unnecessarily limit innovation, trade, investment and economic
efficiency in general.
Over the years, the efforts to address, measure and reduce ABs have
intensified. After the pioneering experience of the Netherlands with the
MISTRAL project and later the Standard Cost Model, to date nearly all OECD
countries reported to have an explicit programme for reducing ABs in place
(OECD, 2006; 2009a; b).2 The OECD recently produced an overview of the most
significant trends shaping the international experiences with cutting red tape.
The analysis suggests, among other findings, that as the strategies and tools
implemented reach maturity, it becomes intrinsically necessary to evaluate
the progress made and check if the AB reduction programme has actually
delivered a better regulatory environment for businesses and citizens (OECD,
2009a, pp. 42ff). These considerations are part and parcel of a wider process of
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evaluation of regulatory policies that accompanies the introduction of more
evidence-based approaches to the regulatory activity.
Despite the large diffusion of these initiatives, governments have so far
not launched comprehensive ex post evaluations of their AB reduction
programmes. Only in the Netherlands and in the United Kingdom, national
audit offices or courts have scrutinised the ABs reduction programme in terms
of its “value for money” and perceived economic impacts (OECD, 2009a, p. 42).
In all other countries, the only ex post initiative has been the publication of
summaries of the total estimated monetary saving of burdens that has
resulted from the programmes. By contrast, the efficiency and effectiveness of
such programmes, the quality of their management, their “value for money”
and the actual welfare impacts on the economy and the society remain partial
at best, and completely unexplored in most of the cases.
The OECD Secretariat commissioned this paper to investigate the broad
benefits from AB reduction programmes and to advise on the development of
a possible methodological framework that could be used for evaluating
existing and future programmes. Accordingly, the paper seeks to design an
evaluation framework that could be used by the OECD Secretariat and national
governments to evaluate and improve their domestic programmes.3
Rationale for evaluating administrative burden reduction programmes
Many countries have now acquired several years of experience with
launching and implementing their ABs measurement and reduction
programmes, but the same cannot be said for the ex post evaluation of those
programmes.4 Inevitably, pressure on them increases to justify the rationale,
illustrate the result, and assess the effectiveness of their strategies. A number
of factors can explain why governments increasingly consider evaluating their
AB reduction programmes (OECD, 2009a). They can be summarised as follows:
●
92
Despite their popularity and political attractiveness, and the considerable
resources invested in them, the programmes have not been perceived as
bringing sufficient concrete relief. There is broad dissatisfaction with the
effectiveness of the programmes, and the “value for money” of the overall
agenda is put in question – especially in the current period of economic
crisis. Also, the only two evaluations that have been published to date (by
the Dutch Court of Audit and the UK NAO) have cast some doubt on the real
relief achieved by the national reduction programmes (see inter alia,
Radaelli, 2007). Since most countries initially targeted their programmes on
business-related ABs, the private sector is particularly interested in both
having concrete results, and improving the programmes wherever
necessary. Citizens, on their hand, also have their stakes in an evaluation,
for the significant resources (public money) invested by governments in the
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programmes require full accountability and political responsibility.
Enhanced demands for more involvement and participation, moreover,
place the citizens as an important stakeholder for government.
●
The landscape has evolved. On the one hand, new advisory and oversight
bodies have been established in some countries (e.g. Germany, Sweden,
United Kingdom), and this inevitably created momentum for evaluation
initiatives. On the other hand, the complexity of the programmes has
grown, with pleads for extending the methodologies to assess costs other
than those resulting from information obligations (e.g. to include all
compliance costs).5 The scope of the programmes is also widening to
include burdens on citizens and the public sector.6 More attention is also
paid to the communication and visibility of the strategies and results. The
published data must be reliable, up-to-date, and close to reality.
●
There is a growing awareness that the programmes are not fully integrated
with other regulatory tools, so as to form a comprehensive reform agenda.
When implemented ex ante, the measurement of ABs is only one (narrow)
aspect of regulatory impact assessment (RIA); and RIA, in turn, is just one of
the many ingredients of a whole-of-government regulatory policy. Even
more importantly, the baseline measurement of ABs leads to a mapping of
the most burdensome pieces of legislation for businesses, but still does not
provide clear indications of which reduction measures would benefit
society as a whole – once the measurement has been completed, reduction
measures should ideally be subject to impact assessment. When this
actually happens, the ex post evaluation of the reduction measures is much
easier, since it can rely on data contained in the impact assessments related
to each of the reduction measures.
●
It is widely acknowledged that the administrative burden reduction agenda
should cover the entire regulatory domain. At present, most programmes
cover only national legislation, while they ideally should systematically
include the multi-level dimension. Only this way can the effects of the
regulatory cascade be better grasped. However, no serious discussion has
taken place to date on how to operationalise the demarcation between the
supranational, national, regional and local origins of Abs. Evaluation can
help identify ways for co-operation across levels of government, win
political support, and address legal barriers.
Against this background, public administrations and policy makers have
their own interest in investing in policy evaluation. Broadly speaking,
evaluations serve three kinds of purposes: audit, management, and learning.
These are processes that bring long-term benefits to the public sector.
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Carrying out policy evaluations in a systematic manner presents a number of
specific benefits, including:
●
Contributing to a more rational, structured and evidence-based policy
making.
●
Generating relevant information – included on unintended consequences –
that is essential for planning, designing, updating and implementing
policies (“closing the policy cycle”).
●
Reducing uncertainty and limiting the risk of policy and regulatory failures.
●
Increasing transparency, enhancing accountability on the allocation of
resources.
●
Allowing benchmarking and sharing of best practices, thereby facilitating
policy innovation.
●
Highlighting policy trade-offs and synergies (policy integration).
●
Contributing to policy communication, public information and awareness,
potentially facilitating further implementation.
Overall, therefore, evaluation, and in particular the impact tracing
process described below, promotes individual and institutional learning,
enhances the legitimacy of and trust in the decision making, and contributes
to policy improvement and policy communication. The evaluation community
must nonetheless be aware that it may be opportune to change the form of
evaluation according to its underlying purpose (see below).
Not only the findings and recommendations contained in the evaluation
report are relevant. The very process of evaluation can be used as a platform
for dialogue and learning. Sometimes, the launch of the evaluation process
signals the priority given by the government to that particular policy, and
contributes to its legitimisation. Even before being involved in the evaluation,
informed stakeholders may start considering the policy intervention and
rectify some misbehaviour or suggest possible corrections. Finally, any given
evaluation may trigger a spill-over process and lead to further initiatives in the
same policy or in associate areas.
The paper is structured as follows. The section on policy evaluation
shortly outlines the theoretical elements that form the concept of policy
evaluation. In particular, it considers and critically discusses the main criteria
underlying ex post appraisal. The paper then addresses the various steps
necessary for designing a framework for ex post evaluation, distinguishing
between a conceptual and a practical approach to it. The next section presents
an examination of the methodologies and criteria to assess the possible
impact of a reduction of red tape on a number of different economic variables;
productivity, market entry and competitiveness, and GDP. The rhetoric behind
the first wave of AB measurements in Europe has relied heavily on estimates
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that a reduction of ABs would lead to a one-off increase in GDP. The paper
investigates the assumptions behind this estimate and goes on to identify a
number of potential correlations between the AB reduction and broader
societal and organisational considerations. A possible taxonomy of indicators
for carrying out ex post evaluations is presented in the penultimate section.
The paper concludes with some remarks and operational recommendations.
Policy evaluation: an overview of the concept
Definition
In general terms, evaluation may be defined as the process of
“determining the merit, worth, or value of something, or the product of that
process” (Scriven, 1991, p. 139, emphasis in original). An OECD definition
refers to evaluation as “a systematic, analytical assessment addressing
important aspects of an object (be it policies, regulations, organisations,
functions, programmes, laws, projects, etc.) and its value, with the purpose of
seeking reliability and usability of its findings” (OECD, 2004a, p. 4).
Evaluation should not be confused with research, audit and control.
These activities differ primarily in their purposes. “While evaluation is
intended to generate information on impact performance and of specific
policies, research lays stress on the production of knowledge, control puts the
emphasis on compliance with standards and audit judges how employees
and managers complete their mission” (OECD, 2004a, p. 3). The framework
developed in this paper combines various aspects that may be closely related
to one of the terms rather than another. This is justified by the fact that this
framework, by its nature, does not intend to be prescriptive on the purpose
that governments should pursue when launching evaluations of their AB
reduction programmes.
When applied to public policies and interventions, the evaluation activity
may take place before their actual implementation (ex ante), during the
implementation (interim) or after the implementation (ex post evaluation). This
paper will mainly focus on the retrospective character of policy evaluation.
Impact tracing
Because policy interventions unfold over time, they may have different
impacts on different populations (targeted addressees as well as untargeted
groups) at different moments in time. Not all effects are observable and can be
evaluated simultaneously when the evaluation occurs. Often it is necessary to
limit the scope of the evaluation, either by considering determinate categories
of actors, or of effects. To do so, policy evaluators must rely on logical models
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that allow structuring their work. To this end, they usually identify the
constitutive elements of policy evaluation:
●
actors: these are decision-making entities, either in the public or the private
sector, or individuals, that may initiate, manage, implement the policy
programme. Actors are also the addressee of the programme;
●
inputs: these are the resources (used by the public administration) invested to
produce the outputs. They are computed in financial, time and staff resources;
●
outputs: these are the direct products of the policy intervention, which the
target groups are faced with. In the case of public administrations, they are the
services and activities delivered directly from using the inputs; and
●
outcomes: these are the changes and effects that result from the policy
intervention. They can be the reaction by the target groups because they face
the outputs, as well as the consequences of such reaction (externalities).
We call impact tracing the process of constructing a logical pattern that
identifies the causal links between the constitutive elements of policy
evaluation.7 Impact tracing does not intend to describe how a policy intervention
actually works. It is used rather as a guide to understand the policy cycle – how
the various policy phases are interlinked; what actors intervene at what stage,
and why; and what are the respective observable effects (see Box B.1).
Box B.1. Example of a possible impact tracing of an
administrative simplification measure
In the case of streamlining the procedures for starting up new businesses
through the establishment of a one-stop shop, the following phases can be
identified through the impact tracing process:
Input
Output
Outcome 1
Outcome 2
Outcome 3
e-government
programmes
One-stop shop
for permits
Reduced
administrative
burdens for SMEs
More start-ups
Greater innovation
rate and economic
growth
There are several advantages in using impact tracing in policy evaluation:
●
96
It helps categorise the types of observable effects resulting from the policy
intervention.8 Constructing a typology of the observable effects may help
structure and streamline the evaluation process. Effects are usually first
divided into anticipated and un-anticipated effects. Both categories include
effects falling either inside or outside the target area. A further level of
analysis seeks to qualify the nature of the effects. Sometimes it is not
meaningful to determine whether effects are “beneficial” or “detrimental”.
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Especially in the case of un-anticipated effects, it may be easier or sufficient
to ascertain whether they are direct or indirect effects (Figure B.1).
●
Impact tracing allows a targeted approach to policy evaluation, making it
easier to precisely design the evaluation according to the given rationale; to
differentiate and prioritise between the effects that need to be considered;
and to organise the collection of relevant data. This is nowadays
particularly helpful as policies tend to become increasingly complex and
evaluations more and more comprehensive, ranging from assessing
efficiency to encompass the quality of governance.
●
Once the evaluation is completed, impact tracing assists with the
interpretation of the results. Policy interventions often address complex
problems and have a wide range of implications. Many external factors may
affect the outcomes and are often changing constantly. Impact tracing enables
a structured consideration of the actual causal mechanisms at work.
Figure B.1. A typology for observable effects
Beneficial
e.g., Shorter start-up procedures
In target area
Detrimental
e.g., Higher rate of start-up failures
Anticipated
Outside target
area
Beneficial
e.g., Greater overall entrepreneurship
Detrimental
e.g., More stringent bank credit policy
Effects
Direct effects
e.g., Changes in business investments plans
In target area
Indirect effects
Unanticipated
Direct effects
Outside target
area
Indirect effects
e.g., Increased enforcement costs
for public authorities
e.g., Reduced environmental protection
standards
e.g., Promotion of market-based mechanisms
in environmental policy
Source: Compiled by the authors.
Evaluation criteria
By definition, evaluation is a normative process implying the formulation
of value judgements. To reduce biases and subjectivity to a minimum, defined
criteria on which to base the normative reasoning and conclusions must be
used. The scrutiny process characterising policy evaluation is based on a
number of criteria that may be combined with each other in a relatively
flexible manner, depending on the rationale of the evaluation and the degree
of sophistication desired (see Box B.2).
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Box B.2. Multiple criteria for policy evaluation
Policy evaluation can take various shapes. A multi-criteria approach allows
evaluators to diversify the analysis and achieve a more comprehensive
assessment. Besides some general criteria, which should always be present, a
number of additional criteria may be applied. The list provided is by no means
inclusive, but it includes the most important criteria.
General criteria
● Relevance. This dimension measures the extent to which the objectives of
public intervention correspond to the needs and problems identified at the
outset. It helps answers the question: “Do the policy goals cover the key
problems at hand?”*
● Effectiveness. This dimension refers to the extent to which i) the objectives of a
given policy were achieved and ii) whether the effects observed were due to the
specific interventions evaluated. This should help answer the questions: “Was
the policy appropriate and instrumental to successfully address the needs
perceived and the specific problems the intervention was meant to solve?”, and
“To what degree do the achieved outcomes correspond to the intended goals?”
● Efficiency. This dimension is to be interpreted as “cost-effectiveness”, i.e. how
economically have the various inputs been converted into outputs and have
produced outcomes; and whether the (expected) effects have been coherent,
and obtained at a reasonable cost. This helps answer the questions: “Do the
results justify the resources used?”, or, alternatively, “Could the results be
achieved with fewer resources?”, and “How coherent and complementary have
individual parts of the intervention been? Is there scope for streamlining?”
Additional criteria
● Transparency. This dimension assesses the degree to which the outputs and
outcomes of the policy intervention as well as the processes linked to
implementation are visible to outsiders (stakeholders, the citizens). It helps
answers the questions: “Was there adequate publicity? Was the information
available in an appropriate format, and at an appropriate level of detail?”
● Legitimacy. This dimension addresses the extent to which individuals and
organised stakeholders accept the policy instrument and are satisfied with it. It
helps answers the question: “Has there been a buy-in effect?”
● Equity. This dimension considers the distribution of benefits and costs among
the targeted groups, and outsiders more in general. It may also refer to the
degree to which various stakeholders participate in the policy process and have
equal access to information. This should help answer the questions: “Where
the effects fairly distributed across the stakeholders? Was enough effort made
to get the appropriate access to information?”
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Box B.2. Multiple criteria for policy evaluation (cont.)
● Persistence. This dimension considers the likelihood that the policy effects will
have a lasting impact, and whether this depends on the continuation of the)
policy intervention. It also addresses the effects that the policy intervention
has had on the functioning of public administration (learning). This should
help answer the questions: “What are the structural effects of the policy
intervention? Is there a direct cause-effect link between them and the policy
intervention?” and “What progress has the administration made from reaching
the policy objectives?”
*
The literature also proposes the so-called “goal-free evaluation” (e.g. Scriven, 1991), in which the
evaluator ignores the ultimate purpose of the policy instrument to be evaluated. The
methodology is pure inductive, as the evaluator’s task is to assess what the policy intervention
actually does, what results it achieves, without being distracted by normative assumptions. By so
doing, unintended effects should emerge as any other accomplishment, and their evaluation
should unfold with less or no biases. This risk should however be minimised by a correct impact
tracing process.
The policy evaluation literature tends to recommend the use of
evaluation approaches based on several methods rather than only one.
Possible ways to do so are combining different methods; using multiple data
within a single method; having recourse to various analysts; and apply on
different theories. The many methods available include varying the level of
aggregation of statistical data; considering diverse statistical samples;
combining quantitative with qualitative analyses, not least through
questionnaires and interviews (Scriven, 1991; Bartlett, 1994; Patton, 1998).
Not all effects are relevant for all criteria. Some criteria become more
useful when applied to a subset of the effects only. For instance, the efficiency
criterion is commonly applied on anticipated effects falling in the target area.
Similarly, equity usually focuses on output and outcomes, but if it refers to the
involvement of stakeholders in the development and implementation of the
policy intervention, it may focus rather on the linkage between inputs and
outputs. It is up to the evaluator to work intelligently and effectively.
Creating an “evaluation framework” that underpins the
“evaluation function”
This part considers the various steps that help design a framework for
comprehensive ex post evaluations. Taken together, the steps should convey
the message that what ultimately determines the success or failure of any
evaluation strategy is not necessarily the establishment of an evaluation unit
within the government. Most importantly, the goal is to create a multiple and
wide-ranging system that supports the evaluation function of any given
policy, or policy programme (Patton, 1998; 2002). In developing such an
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evaluation function, the emphasis is put on core principles that may be
adjusted according to the institutional, administrative and cultural feature of
any given jurisdiction, as well as the political context in which evaluation
takes place. Attention is not given to pre-determined organisational
arrangements and methodological approaches, which may not fit optimally
everywhere and at any time.
The steps building the evaluation framework can be distinguished in
conceptual and practical.
Table B.1. Organisational arrangements and methodological approaches
to evaluation: An overview of the conceptual and practical steps
Conceptual dimension (design) Description
1. Setting the context
Understanding the underlying contexts in which both the policy intervention has
been implemented, and the subsequent evaluation will take place
2. Structuring the evaluation
Designing the scope and methodology, including:
● Developing the terms of reference.
● Design methods to access and use information.
● Categorising the tests and selecting the appropriate combination of them.
● Setting the quality standards to be expected from the evaluation process.
Practical dimension (implementation)
1. Roles and responsibilities
Depending on who initiates and who carries out the evaluation process, the scope
and focus of the latter may change. Three forms of evaluation can be identified:
● Internal (carried out from within the administration).
● External (either commissioned or on external independent initiative).
● Participatory (relying on public-private expertise).
2. Capacity-building
What capacities and what kind of organisation are needed for carrying out
evaluation activities are two elements directly related to the question on whether to
carry out an evaluation internally, or to outsource it to external entities. Account
must be taken on human resources, timing and budgeting, and costs related to the
collection of data.
3. Knowledge diffusion and
utilisation
For it to have a positive impact (policy learning), the evaluation process must be
well and timely communicated, and a clear understanding of the responsibilities
(checks and balances) is crucial for minimising biases.
Source: Compiled by the authors.
The conceptual dimension (design)
Setting the context
Policy evaluation can help, but it is not a magic wand. In particular, it does
not intervene in a vacuum but is necessarily informed by pre-existing
knowledge as well as concomitant factors. Sponsors of policy evaluation are
usually better off if they have a clear picture of the underlying contexts in
which both the policy intervention has been implemented, and the
subsequent evaluation will take place. What was the baseline scenario leading
to the decision to intervene? What has changed over the years since
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implementation? Here again, integrating the exercise with the RIA process
might be instrumental. Such an analysis is critical for it enables a better
definition of the policy problem, and to clarify the purpose of the exercise. At
the same time, setting the context helps better considering the implications
that the evaluation process bears with it. Because any evaluation has
constraints (be them linked for instance to limitations of resources, or due to
the chose conceptual, methodological approach and scope), it is important to
build and manage the expectations accordingly and start an effective,
transparent and objective communication campaign.
Setting the context also means identifying the main actors concerned by
the policy intervention, and determining their linkage with the evaluation
exercise. Actors can be decision makers and policy masters; civil servants and
policy executors; stakeholders (direct and indirect), and opinion formers. They
may play different roles, from funding the evaluation to carrying out the
assessment and communicating the findings. Knowing the constellation of
actors, their mutual relationships and their degree of involvement in the
policy area helps ascertain their relevance, representativeness, expertise, and
agendas.
It is moreover advisable to identify counterparts in other jurisdictions as
well as international evaluation networks that bring together civil servants,
stakeholders, consultants and academics active in the field. This clearly
increases the possibilities for sharing experiences; finding solutions to
common problems linked to evaluation; and getting opportunities for further
training.
Structuring the evaluation
After setting the context, evaluators must proceed to the design of the
scope and methodology. Structuring the evaluation is arguably one of the most
challenging tasks, and it bears direct implications on the overall process
downstream. Bearing in mind the evaluation criteria discussed above, this
section suggests some best practices to overcome this initial barrier.
●
Terms of reference. This initial step is important as the document frames
the scope of the evaluation, the terms of references set the specific
objectives, tasks, deadlines and resources to the evaluators. At the same
time, nonetheless, they should allow a certain room for manoeuvre to the
evaluator to pursue its tasks.
●
Provision of information. This heading refers to the methods used to access
relevant and reliable data. At this stage, evaluation designers usually
include the steps leading to the “impact tracing” process mentioned above,
as well as the channels through which information is collected. The
channels may be direct interviews, surveys, documentation reviews, and
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direct observation. One approach does not exclude the other. On the
contrary, they usually are mutually supportive and complementary, as each
presents advantages and drawbacks. It is usually left to the evaluator to
choose among the best ways to collect data, and to filter it to retain as much
relevant and reliable information as possible (Brady/Collier, 2004).
●
Identification of the evaluation test. By categorising the tests and selecting
the appropriate combination of them, evaluators are forced to reflect on
how the various evaluation tools and mechanisms they intend to adopt are
instrumental in achieving the underlying objectives of the evaluation
process (Box B.3).
●
Quality standards. It is best practice to set at the outset the quality
standards to be expected from the evaluation process. This allows for
intermediate monitoring (if interim reports are foreseen) and facilitates an
objective assessment of the evaluator’s work. A possible basis for
developing such standards are the Programme Evaluation Standards (Joint
Committee, 1994).9
Box B.3. Classifying evaluation tests for regulatory tools,
institutions and programmes
Conceptually, three types of evaluation tests may be performed, depending
on whether attention is put on assessing compliance (process), performance
(outputs) or function (outcomes) (Harrington/Morgenstern, 2003):
● Compliance tests assess whether the regulatory quality tool, institution or
programme are formally applied in compliance with the procedural
requirements, as set out in laws, policies or guidelines as appropriate.
● Performance tests measure the quality of the analysis undertaken, going
beyond the question of formal compliance with procedural requirements.
● Function tests evaluate to which extent the regulatory tool, institution or
programme actually contributes to improving the decision-making
process and its outcomes.
The practical dimension (implementation)
Roles and responsibilities
“Who evaluates? And on which behalf?” are two key questions that may
have fundamental repercussions on the results, and their impact on the
evaluated policy and institutions. Evaluations can take three different forms,
according to who is in charge of designing and carrying them out. Depending
on who initiates and who carries out the evaluation process, the scope and
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focus of the latter may change. For examples, the mandate of audit
institutions may limit evaluation to consider the efficiency of the programme,
while a stakeholder-driven exercise or a multiple peer-review may encompass
the economic impacts of the reduction measures. Moreover, each scenario has
its own advantages and challenges (Table B.2), and a priori it is not possible to
prefer a specific form over the other. The choice normally depends on various
factors, including the institutional setting; the political context; and the
specific policy intervention at stake. Sometimes, decisions on whom to
entrust evaluation to must be taken on an ad hoc basis. Often, a combination
of the approaches is advisable.
Table B.2. Forms of policy evaluations
Form
Brief description
Advantages
Challenges
Internal evaluation
Carried out from within
the public administration
(self-evaluation)
Relevance maximises learning and
buy-in long-term capacities better
access to internal information
easily adjustable methodologies
Political commitment selfreferential, partisan character lack
of objectivity legitimacy external
communication internal costs
External evaluation1
a) commissioned by
the government
Enhanced accountability high
credibility, legitimacy flexibility
in planning and allocation of
resources expertise
Acceptance lack of ownership,
reduced learning information
asymmetry between evaluators and
evaluated
b) external own initiative
Enhanced accountability policy
as shared responsibility
diversification of perspectives
expertise speed
Timing within policy cycle,
relevance legitimacy (possible
partisan, partial character, integrity
of funding) lack of ownership,
reduced learning dissemination
limited acceptance
Relies on public-private
expertise
Mutual learning legitimacy diffused Speed politicisation
acceptance
representativeness
Participatory
evaluation2
1. Participatory evaluations imply that the addresses of the policy intervention are directly involved its
evaluation. The degree of the involvement may vary but in principle participation should be ensured
throughout all the stages of the evaluation process. See for instance Forss (1989) and Fetterman et al. (1996).
2. The external body carrying out the evaluation may belong to the state institutional setting (e.g. a
parliamentary committee or commission; the Court of Auditors or similar audit institutions, or the
Ombudsman office), or be other public and private organisations such as universities and research
institutes, think tanks, foundations and other stakeholders. The degree of autonomy of these bodies varies.
Source: Adapted and complemented by the authors from OECD (2004a, p. 5).
Capacity building
What capacities and what kind of organisation are needed for carrying
out evaluation activities are two elements directly related to the question on
whether to carry out an evaluation internally, or to outsource it to external
entities.10 Internal evaluations require building in-house capacities and skills
that might be available on the market at a lower cost. So-called sunk costs and
initial costs may be particularly high, and because of the dynamic nature of
evaluation, investing in evaluation may imply mid- to long-run follow-up
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costs. For instance, dedicated staff needs to be (hired and) trained to keep up
with policy developments and methodological advances.
Time planning and budgeting of the evaluation are key elements in this
regard. The types of costs incurred may be very disparate. Among other things,
budgeting should not overlook the costs of:
●
winning the necessary political support (if the evaluation is not set
exogenously);
●
conceiving the evaluation (drafting the terms of reference);
●
allocating the internal operational responsibilities;
●
providing training (if necessary);
●
organising the call for tender and selecting the evaluation team (if
necessary);
●
carrying out the evaluation (data gathering, preparation, drafting and
communication of the report); and
●
organising the utilisation of the findings.
Collecting the data is often the main practical challenge for the evaluator.
A preliminary enquiry on the availability of reliable data helps determine the
scope of the evaluation and the type of approach that it is desirable or feasible.
These ex ante considerations facilitate the design and budgeting tasks.
Knowledge diffusion and utilisation
The primary objective of any evaluation activity is to collect information
and present it in such a way that it can have practical consequences and the
broadest impact possible. As a minimum, evaluation influences the policy
agenda. The ultimate goal shall be to prompt policy learning. The design and
use of the existing and new policy instruments should be improved further to
policy evaluation. To this end, the way information and knowledge are
disseminated and used is crucial (Thoening, 2000). More in general, launching
a proper communication strategy from the very beginning is very instrumental
(Chattaway/Joffe, 1998).
All actors concerned – be it within the administration, the decision
makers, or the stakeholders – must have an as direct and neutral access as
possible to the results of the evaluation. The latter never constitute the only
source of information available. Evaluation findings and recommendations
are just one piece of the information puzzle inputting policy making.
Preferences, opinions and policy agendas are shaped progressively from
multiple and heterogeneous sources. Evaluations are not used alone, but they
are synthesised with prior knowledge, concomitant information, and core
beliefs (March/Olsen, 1989). Hence, the relevance of evaluations depends as
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much in the methodologies and the reliability of the data used as in how the
process is embedded in the overall policy framework.
Evaluation has a strong pedagogic value, and in principle it would be
opportune that those meant to learn from it (often the sponsors) are involved
as closely as possible. This however may end up in tautological, selfreferential exercises. Moreover, to avoid biases, evaluators should not be made
responsible for communicating the results of their work and controlling the
way in which this is utilised. A too close relationship between evaluators and
users creates serious risks. On the one hand, people tend to prefer those
findings that can be associated more directly to their core beliefs and values.
This might distort the evaluation, which would end up merely confirming
already established views (Wildavsky, 1984; Sabatier, 1988). On the other hand,
problems may arise from the fact that often those commissioning the
evaluation are also the primary end-users of it. This might raise the question
of which actors are ultimately allowed to be involved in determining the
design, scope and method of the evaluation; selecting the evaluators; and
assessing the findings – and why others are excluded.
Ideally, the various phases of the evaluation process should be kept
distinct from each other. Because reality is more complex, and to allow
learning, there must be a permeable interface between sponsors, evaluators
and users. The relationships between the various actors throughout the
evaluation process must be carefully planned and balanced. In practice it is
clear that the evaluation design and presentation will affect its utilisation
(Weiss, 1998). It is therefore crucial that logical and control mechanisms are in
place to minimise the biases. Being aware of the intrinsic pros and cons of the
various evaluation scenarios described in Table B.2 above allows establishing
the necessary procedural and methodological checks and balances.
Methodological considerations and criteria for assessing
AB programmes and evaluating their economic impact
In this section, we build on the previous sections and look more
specifically at the problems that may be faced by governments wishing to
launch an ex post evaluation of an ABs reduction programme. At first blush,
the success of these types of initiatives seems rather easy to evaluate: as the
goal of the reduction programme is expressed in quantitative terms (e.g. a 25%
reduction of overall ABs), it might be sufficient to check that the target has
been reached and then consider that the programme has been successful.
Testing for common mistakes
The ex post evaluation exercise needs to look beyond the achievement of
the target set by the policy makers, and analyse the real outcome of the
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programme in terms of social welfare and industry competitiveness. Here,
several complications may emerge. As regards the methodological features of
the ABs measurement, potential challenges include the following:
●
The achieved reduction may not correspond to actual relief due to the types of
burdens that have been reduced. For example, if the burden reduction has
fallen on administrative activities such as the keeping of records for a
certain number of years, the elimination of these rules would not
immediately be perceived by businesses, whereas the elimination of actual
information processing and reporting obligations may be perceived as a
relief.
●
Some costs may have erroneously been considered as burdens, while they
correspond to business practices. This can happen in particular whenever the
observed conduct exhibits a significant “business as usual” or “BAU” factor.
If these costs have been classified as ABs during the baseline measurement,
their reduction provides a misleading indication of the burdens reduction
achieved, as well as of the corresponding relief for businesses.
●
Some administrative burdens may have been overestimated since the Standard Cost
Model assumes 100% compliance with the information obligation. This is perhaps
the weakest feature of the Standard Cost Model. Assuming that the whole
population of affected businesses complies with the legislation can lead to
overestimating the level of ABs generated by that specific obligation, and
accordingly overestimating the burdens reduction achieved by eliminating
or simplifying that provision.
●
In other cases, referring to a “normally efficient business” can lead to an overestimation
of the “learning by doing” economies achieved by firms in complying with certain
information obligations. In the Standard Cost Model, the concept of a normally
efficient business is used as a reference – which means that inefficient
behaviour by firms is not taken into account when calculating burdens.
Especially when direct assessment is used (i.e. no telephone or face-to-face
interviews or other empirical methods), the concept of normally efficient
business may underestimate the businesses’ capacity to adapt overtime to
existing legal provisions and reduce compliance costs overtime.
Assessing effectiveness
In addition to the soundness of the methodological choices adopted
during the measurement, an ex post evaluation should ensure that the
reduction measures adopted: i) do not create additional sources of cost for
businesses, while reducing ABs; ii) do not increase costs for other agents, such
as consumers or public authorities; iii) do not eliminate even greater benefits
generated by the information obligation that has been eliminated/simplified.
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More in detail:
●
A reduction proposal may lead to lower administrative burdens, but at the
same time increase other compliance costs for the same targeted businesses.
As portrayed in Figure B.2 below, ABs constitute only a subset of costs
imposed on businesses by legislative acts. For example, the implementation
of an e-government or any other IT-enabled solution can reduce the amount
of time related to compliance with the information obligation. At the same
time, however, it may require a degree of investment in upgraded IT
equipment and training of employees, which would not be considered as ABs,
but fall generally in the category of compliance costs. Similarly, a proposal
that reduces ABs may increase public expenditure in monitoring and
enforcement (see below): these costs may be recovered by the government
through higher tax burdens, thus increasing direct financial costs of
legislation. Finally, a proposal may reduce burdens by requiring structural
changes in the production process, which would guarantee a certain level of
product safety without any need for burdensome certifications: in this case
too, burdens are reduced, but costs may increase.
●
A reduction proposal may reduce administrative burdens, but at the same
time increase administrative burdens of a different origin. In the context of
multi-level governance, the reduction of ABs achieved by eliminating some
information obligations at a certain level of government – say, at the
national level – may require the introduction of new information obligations
at the lower level – say, at the regional or municipality level. The same can
be said for the regional v. national levels: for example, if the obligation to
label pharmaceutical products by indicating their basic content and
warning on potential consequences of improper use was removed in EU
legislation, member states would have to solve the problem themselves by
adding a specific information obligation in national legislation. This would
mean less “A” burdens, but more “B” or “C” burdens in the jargon of the
Standard Cost Model.11
●
A reduction proposal may reduce administrative burdens, but at the same
time increase costs for other private actors (businesses and/or citizens). For
example, reducing labelling obligations for products may increase
information costs borne by consumers, who would need to collect their
information from other sources in order to make an informed choice of
what products are most likely to fit their preferences.
●
A reduction proposal may lead to lower administrative burdens, but at the
same time increase monitoring and enforcement costs for public authorities.
This is often the case whenever the information obligations eliminated involve
the keeping and reporting of information available to businesses, but not to
public authorities. For example, the provision of information on the respect of
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hygiene standards or the reporting of large exposure by banks are typical
instances of very burdensome activities for businesses that comply with these
requirements. These information obligations are vital for public authorities, as
they ensure that more informed businesses provide information that would
otherwise not be readily available to public authorities. Absent the provision of
this information, public authorities would have to deploy more resources to
obtain the information, which is likely to lead to more inspections and
enforcement costs – in our two examples, more hygiene inspections and more
investigations into the riskiness of banks’ exposure vis-à-vis certain clients.
●
A baseline measurement of administrative burdens can enable a more
efficient, responsive and risk-based organisation of monitoring and
enforcement by public institutions. For example, the baseline measurement
may lead to the identification of overlapping information obligations, leading
to a more efficient use of reporting and inspections by public authorities. In
this case, a reduction in ABs is coupled with a reduction in monitoring and
enforcement costs, which leads to a more desirable “win-win” situation for
public authorities and businesses. Such situations should be highlighted
during the ex post evaluation as a potential “multiplier” effect of the
administrative simplification sought by the reduction proposal. One case in
point is in Finland, where it is reportedly observed that “the measures to
reduce AB of businesses (e.g. by developing e-government solutions) also
increase the productivity of the public sector”.12
●
A reduction proposal may reduce administrative burdens, but at the same time
reduce the benefits associated with the legal provision at hand. When
redundant and irritating burdens are reduced, normally no undesirable
shortcoming follows. However, in most cases legal provisions are in place for a
specific purpose – after all, regulation is primarily grounded in expected
benefits. Take the example of product labelling for consumer (what is normally
defined as a “third-party information obligation” in the jargon of ABs reduction
programmes): removing labels that contain product information may well
lower ABs, but this information can be essential for consumers in taking an
informed decision on which products to purchase, and how to use them.
Using surveys to assess the perceived impact on businesses
To date, the most common way of assessing the effectiveness of ABs
reduction programmes in achieving their targets and goals has been the use of
business surveys. This, of course, makes sense since, if the direct beneficiaries
are the businesses, one of the most straightforward ways of assessing the
extent of the relief they have perceived is to ask them. This method has been
used by the Dutch Court of Audit and the UK National Audit Office in the ex
post evaluation of the ABs reduction programmes.
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Figure B.2. Breakdown of compliance costs
Compliance costs
Direct financial
costs
Substantive
compliance costs
Monetary transfers
to public administration
(taxes, duties, etc.)
Modification of
productive process or
output
Administrative costs
Business
administration costs
Administrative
costs from central
government
regulation
Administrative activities
that businesses may
continue if the regulations
were removed
(“Business as usual”)
Administrative activities
that businesses only
conduct because
regulation requires it, i.e.
administrative burdens
Source: Andrea Renda (2010) based on the Better Regulation Executive (2005), “Measuring Administrative Costs:
UK Standard Cost Model Manual”, Figure 2, available at www.bis.gov.uk/files/file44503.pdf.
Potential problems that may emerge in carrying out extensive surveys of
affected businesses include the following:
●
Businesses may have an incentive to downplay the actual relief brought about by
certain reduction measures, in order to ask for more simplification and
further reduction proposals in the future.
●
The time elapsed between reduction proposals and the business survey must not be
too short, as it should allow for adaptation to the new rules by businesses
(often, when measuring ABs, businesses still report compliance with old
rules as opposed to recently adopted ones).
●
The sample of IOs and businesses chosen and authorities surveyed must be
adequately representative: in the United Kingdom, the NAO has interviewed in
February 2008 more than 2 000 businesses to find out about their
experience in complying with regulation. In assessing the behaviour of
departments involved in the measurement, the NAO chose only the four
departments that together account for approximately 75% of overall
burdens according to the UK baseline measurement. The Dutch Court of
Audit analysed 24 government measures, which included 20 measures that
were taken in 2003-04 to reduce the AB and four new regulations that
resulted in increased ABs. For the latter, the Cabinet had to take
compensating measures. The Court also studied the effects that the
reduction policy has had so far on the business community and the
methodology applied to measure ABs, and concluded that the Cabinet had
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correctly applied the methodology set out in the SCM. Finally, the Court of
Audit found that businesses had not fully perceived the announced 25%
reduction. The reason for this is that the rules scrutinised were often less
onerous in practice than the government presumed, and businesses
performed certain administrative tasks also for other purposes, or would
still have to provide the information concerned to other parties, apart from
central government.13
●
The indicators chosen must combine direct measures of success and indirect findings
of improvements in the regulator environment. Given that the measurement of
ABs through the SCM does not have the ambition to provide statistically
reliable information, it is important to avoid testing only the reliability of
the estimated savings. What is more important is to ask businesses and
public authorities if they have experienced improvements in certain policy
domains, and why.
Box B.4. The Dutch perception monitoring study
The 2007-11 programme adopted by the Dutch Cabinet after the last election is
structured around three principles: i) there should be less annoyance for businesses
from things that irritate them; ii) things should be made simpler for business – for
instance, with faster and better service; and iii) the decrease in the regulatory burden
and the simplification of business compliance with the obligations imposed by
government, there will be less regulatory burden in the perception of business.
These principles have been implemented with the June 2007 Regulatory Burden
Action Plan. Compared with the previous measurement of ABs undertaken in the
Netherlands in 2003, the 2007 Action Plan features an additional tool, aimed at
capturing the actual perception of the reduction achieved by the business sector. For
this purpose, within the government’s communication strategy, a “perception monitor”
has been developed and is used by the Regulatory Reform Group (a joint directorate of
the Ministry of Economic Affairs and the Ministry of Finance). The “perception monitor”
measures the changes in regulatory burdens, experienced by all entrepreneurs (macro
level) and by individual entrepreneurs (micro level). Both levels are monitored over a
period and the changes in experience are analysed and explained in progress reports.
Within the “perception monitor”, a specific study was commissioned by RVD/Dienst
Publiek en Communicatie (the Netherlands Government Information Service/Public
and Communication Department) and for the Regiegroep Regeldruk (Regulatory Burden
steering group). The representative study focused on business entrepreneurs’
perception of the regulatory burden. Entitled the Perception Monitor Regulatory Burden,
the study was to provide answers to the following questions:
● To what extent is the regulatory burden considered a problem in doing business?
(placing on the agenda).
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Box B.4. The Dutch perception monitoring study (cont.)
● To what extent do business entrepreneurs feel restricted by legislation and
regulations?
● What are the aspects of legislation and regulation that impact on business
entrepreneurs?
● How do entrepreneurs perceive the actual amount of laws and rules?
● What do entrepreneurs expect in respect of the regulatory burden and to what extent
do they believe the government when it claims it wishes to reduce the regulatory
burden?
● How
satisfied are entrepreneurs with the quality of service provided by
municipalities and other government institutions and with which service aspects are
they satisfied or dissatisfied?
● To what extent are regulatory burden perceptions dependent on industrial sector and
scope of organisation?
● Do start-up businesses experience the regulatory burden to the same level as other
businesses, or less?
The study group comprised some 550 000 businesses and institutions in healthcare,
welfare, and education. The Perception Monitor was carried out by means of telephone
interviews held in a random sample stratified by size and industry of 1 214 businesses
and an additional random sample of 210 start-up businesses. The interviews – carried
out between 28 February and 14 March 2008 – were based on a questionnaire drawn up
in consultation with the commissioning government authority.
The Perception Monitor Regulatory Burden revealed that the issue of regulatory
burden is high on the agenda of many entrepreneurs. Four out of ten companies are
affected in their business, spending time and money observing laws and regulations
and providing the information demanded by the government. In particular,
respondents have been affected by the unnecessary information obligations and high
costs of observing regulations. Also, one quarter of all companies was severely
affected by the amendments to laws and regulations: they were seriously affected by
the continuous amendments to laws and regulations, conflicting legislation and
regulation and strict controls by regulators and inspection boards. About six out of ten
companies found the number of laws acceptable or were neutral and a comparable
amount found that meeting all the rules took little to no time. There is an increasing
impression that the regulatory burden has increased rather than decreased. While a
large majority is aware of government plans to reduce the regulatory burden, they
have little confidence this will actually happen.
Source: Dutch response to the OECD Cutting Red Tape II questionnaire.
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Testing for effectiveness: have the stated goals of the measurement exercise
been achieved?
When it comes to effectiveness, the principal virtue of an ex post
evaluation exercise is its link with the scope and the stated goals of the
policy or programme to be evaluated. In the case at hand, it must be recalled
that the scope of the ABs reduction exercise has been expanded over time:
while the first measurements (in the Netherlands, but also in the Czech
Republic, Denmark, the United Kingdom) focused mostly on the mere
calculation of red tape based on the collection of data on the time spent in
performing administrative activities and its money equivalent, more
recently the exercise has been expanded to encompass several categories of
regulatory addressees. For example, in the Netherlands the burdens
reduction exercise has been extended first to citizens, then to certain public
administrations; and the scope has been enlarged to cover substantive
compliance costs, which would not fall into the narrower category of ABs.
Accordingly, an ex post evaluation should first of all look at the stated
goals of the reduction exercise, to measure the effectiveness of the
programme in achieving its objectives. In turn, the goals also affect the scope
of the measurement and reduction exercise. Originally, as already
mentioned, the underlying rationale has been merely business-oriented: the
ultimate goal was enhancing the competitiveness of domestic businesses
and the key assumption was that reducing AB on businesses would in
principle free resources to be re-invested in other, more productive activities.
Against this background, the key effectiveness indicators of the first
reduction programmes would include the following:
●
the number and type of procedures that have been simplified or repealed;
●
the estimated amount and type of resources that business has actually
freed up further to the reduction of AB;
●
the estimated percentage of these resources that was reallocated to more
efficient and productive activities;
●
the increased entry of new firms due to a more business-friendly
environment;
●
increased production and/or lower prices due to higher productivity and
enhanced market competition.
For example, Gelauff and Lejour (2006) estimated the impact of a 25%
reduction of ABs in the EU25 on labour productivity and ultimately on GDP.
Using country specific labour income shares, they translate this reduction
into a 1.3% increase in labour efficiency by 2025, which raises the volume of
GDP in Europe by about 0.8%. In the long run the capital stock adjusts to the
higher level of labour productivity, leading to a long-term change in GDP
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volume of up to 1.3%. In addition, the two economists assume that the rise
in GDP would induce more spending on R&D, and that consequent R&D spillovers would magnify the outcome of the AB reduction, leading to an
additional GDP increase of about 0.2%. Finally, there would be a trade impact
induced by a fall in prices sue to excess supply and the need to conquer
foreign markets, which ultimately leads to an aggregate increased in GDP of
1.4% in the EU25. Following this approach, useful indicators of the
effectiveness of a burdens reduction exercise would be indicators of labour
productivity, R&D spending, and terms-of-trade indicators. All these
indicators may be useful in testing whether the virtuous cycle described by
Gelauff and Lejour (2006).
Although most countries have used the SCM for similar purposes, rooted
mostly in the need to cut red tape to increase competitiveness, the burdens
reduction exercise has become more complex over time. Especially for those
countries that have devised expanded, more sophisticated assessment
methodologies, simply testing for the impact on labour productivity and R&D
spill-overs would not suffice. More in detail:
●
When the stated goal of the programme is to go beyond red tape to
encompass all regulatory costs in the measurement, including inter alia
compliance costs, evaluators may wish to use additional indicators together
with the ones already mentioned for testing the effectiveness of
programmes focused on ABs. In particular, surveys and other empirical
methods may be needed to capture the perceived reduction of regulatory
costs experienced by the targeted businesses.
●
When the simplification programme includes citizens, surveys are essential
to capture the perceived reduction in ABs: in some cases, other indicators
may be used – e.g. quality of service (QoS) indicators such as delays, delivery
times, reaction time for emergency requests, waiting time in call centres,
etc., which have to be identified on a case-by-case basis.
●
When the measurement programme includes public administrations, specific
indicators should be used in ex post evaluation. These include indicators on
resources allocated for each activity targeted by the reduction programme,
but also other indicators such as the number of inspections, or the time
needed to monitor specific activities.
Accordingly, the evaluation of ABs reduction programmes must be
approached as a flexible exercise, where the choice of appropriate indicators
reflects the scope and the stated goals of the programme.
Depending on these variables, evaluation programmes may also
consider other dimensions that are broader and might also imply longer
time horizons, but which are as relevant and strategically important as the
measurement of labour productivity, R&D spill-overs and terms-of-trade.
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Such evaluations should for instance look at wider changes brought about by
the AB programmes, such as:
●
Speedier, simpler decision making.
●
Enhanced transparency of regulatory and administrative activity.
●
Smoother implementation of legislation.
●
More durable legislation.
●
More in general, whether legislation has become more client- and/or goal
oriented or is still procedure-based.
The indicators should also consider business internal impacts, such as
whether simpler administrative requirements have brought about
streamlined and more effective internal decisional procedure and human
resources management.
An example of the wider dimension of evaluating AB reduction
programmes is the initiative to establish Common Commencement Dates
(CCD). The CCD is an example of an initiative originated in the framework of
AB programme, but not directly targeting cost reduction (see Box B.5).
Box B.5. The Common Commencement Date initiative
To help business improve its planning for new regulation and to increase
awareness of the introduction of new or changed requirements, the Dutch
government has introduced so-called Common Commencement Dates
(CCDs) in 2009. The idea is to limit the number of dates in the year on which
new regulation may be started. It is hoped that increased awareness by
businesses of new or changed obligations will result in smoother adaptation
by the economic operators to the changes imposed by the new regulations,
anticipation of possible problems, and better planning of future investments.
This should improved overall compliance levels.
In the Netherlands, two CCDs per year will be introduced, with a minimum
implementation period of three months for all acts and orders in council
directly relevant for businesses and organisations. Information is provided on
relevant websites, and with timely and clear information on the development
of draft regulations and their immediate effect on companies and
institutions.
Some countries are considering extending the scope of the evaluation in
this direction (see Box B.6), but the process still need to be better structured
and more systematic.
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Box B.6. Towards a comprehensive evaluation approach:
the UK NAO analysis
While still focusing mainly on the underlying “value for money” rationale,
the evaluation by the UK National Audit Office (NAO) includes policy
considerations that reveal the necessity and importance to assess, for
instance, “wider benefits for business”; the monitoring and guidance
functions within government; as well as the extent to which good practices
are shared and learning occurs amongst departments (NAO, 2008). The NAO
nonetheless notes that still insufficient efforts are made to grasp the
contribution of the reduction programme to the overall regulatory reform
agenda. It therefore states again its recommendation to the departments to
“supplement their estimates on ABs with a broader suite of indicators to
evaluate non-quantifiable improvements in the regulatory environment”
(NAO, 2008, p. 28).
The challenge in this exercise is to establish the direct causal
mechanisms, especially if regulatory reform in the country has not been
designed and implemented simultaneously and co-ordinated. A reduction of
the length of administrative procedures might for instance be the result of
efforts made in the framework of AB reduction programmes, or of
independent, perhaps long established e-government initiatives. It may prove
difficult to determine which of those policy interventions have been
instrumental to achieve the actual reduction.
Similar challenges may arise in relation to assessing the costs of running
the programmes. As the UK NAO report indicates, for instance, UK
departments have had difficulties in making the distinction between the cost
of the resources directly invested in the An reduction programme, and those
related to wider, inter-connected better regulation initiatives. This has led to a
lack of recording and reporting (NAO, 2008: p. 4).
Proportionality: assessing the measurement programme’s design and
implementation
Another important dimension that must be taken into account in
assessing the overall outcome of an ABs reduction programme is the
opportunity cost of running that programme, and the inherent quality of its
design and implementation. We refer, in particular, to: i) the budget and
human resources spent on the programme; ii) the use of empirical techniques;
iii) the availability of data and the expected degree of precision of the
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measurements; and iv) the consistency of the measurement exercise across
IOs and ministries.
116
●
First, the evaluation must look at the budget and human resources that are
allocated to the implementation of the measurement and reduction
process, especially when these resources could have been allocated to
competing uses – for example, to strengthen ex ante IA or ex post evaluation
of existing policies. The cost associated with some national or regional
measurements can be significant, and varied substantially across countries
(estimated – excluding internal costs – at GBP 11 million in the United
Kingdom, EUR 20 million at EU level, EUR 3 million in the Netherlands,
EUR 2 million in Denmark, etc.).14 This difference is explained, more than
by the depth of the measurement, by the size of the country, the extent to
which external consultants were involved, and also by the latter’ terms of
reference.15 As regards the internal human resources used, countries seem
to have differed noticeably so far: for example, during the first Dutch
programme approximately 3-5 dedicated staff members per ministry have
been involved in the measurement, whereas in Denmark only one half-time
civil servant per ministry took part, together with the equivalent of 6-7 fulltime staff in the co-ordinating unit. Also in the United Kingdom, 3-5 staff
members per ministry were involved in the measurement.
●
Another way of assessing the value for money of the overall measurement
programme is the analysis of the proportionate use of empirical techniques.
An oft-quoted feature of ABs is that they tend to distribute themselves along
a “Pareto” distribution, i.e. the 20% most burdensome information obligations
(IOs) account for at least 80% of the total burdens generated by businessrelevant legislation on firms. This means that the really burdensome IOs are
a small subset of the total: only for these ones the use of sophisticated
empirical methods may be advisable. More precisely, some empirical
techniques (e.g. face-to-face interviews, expert workshops, external studies,
business test panels, Delphi methods and stopwatch methods) are often too
expensive, whereas cheaper methods include telephone interviews and
direct expert assessment. As shown below, in Table B.3, in the United
Kingdom the choice has fallen on the use of a direct assessment by the
consultants in 55.7% of the cases, which accounted for only 7.4% of total
burdens. In all other cases, more expensive (and sometimes not necessarily
more precise) techniques have been used. In Denmark, approximately 80% of
IOs have been measured through face-to-face interviews (3-5 interviews per
business segment).
●
In addition to the choices made by the experts that carried out the baseline
measurement, it is important to assess the availability of data and the
consequent precision of the measurements performed. For example, the
Danish Commerce and Companies Agency evaluated the work performed
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Table B.3. Empirical techniques used in the United Kingdom measurement
IOs/DRs measured
by method (%)
Costs of IOs/DRs measured
by method (%)
Business interview
16.8
69.1
Expert panel (including Virtual Expert Panel)
26.1
13.9
1.4
9.7
Measurement method
Business interview and Expert Panel
Assessment
55.7
7.4
Total
100
100
Source: PwC (2006), “Administrative Burdens Measurement Exercise: Technical Summary”, Table 10,
available at www.dti.gov.uk/files/file35995.pdf.
by the European Commission in 2007, one year after the official integration
of the SCM into the Commission IA guidelines, in March 2006. In that
occasion, the Danish body observed that “in those cases where a
quantification of ABs was undertaken, the outcome was poor. This was not
due to the methodology of the Standard Cost Model itself, rather due to
difficulties in the underlying assumptions and data availability”.
Table B.4. Evaluating the Commission’s use of the SCM in impact
assessment
Completed IAs
Initiatives
relevant to
admin costs
The admin
costs are
qualified
The admin
costs are
substantial
The admin
costs are
quantified
SMEs
mentioned
Regulations
9
5
5
5
2
4
Directives
9
6
6
2
2
3
28
9
7
5
0
3
Decisions
4
0
0
0
0
0
Other
1
0
0
0
0
0
Total
51
20
18
12
4
10
Communications
Source: Danish Commerce and Companies Agency, 2007.
Efficiency: are we cutting also benefits?
After evaluating the inherent quality of the measurement exercise and
the potential effectiveness of the burdens reduction programme, the ex post
evaluation should move to the consideration of the social impact of reduction
proposals. In this respect, it is worth recalling that:
●
Administrative burden reduction projects can affect allocative efficiency and
productivity whenever they free up resources that can be allocated to more
productive uses, without imposing costs on other entities (for example, no
increase in enforcement costs of public administrations). The rhetoric
behind the first wave of ABs measurements in Europe has relied heavily on
estimates by the Dutch CPB that a reduction of 25% in ABs would lead to a
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(one-off) increase of 1.5% in GDP(Gelauff and Lejour, 2006). For example, in
their investigation about the Dutch Standard Cost Model, Löfstedt et al.
(2008) come to the conclusion that “the [SCM] ignores how businesses will
re-invest after the easing of the administrative burden”, and thus that “the
benefits of the elimination of administrative burdens cannot be measured”.
Likewise, a NAO report raised doubts about the United Kingdom reduction
of ABs and stated that “it has not been possible to find evidence of the
impact on the productivity of the economy”; and that “the wider impact of
the Programme [on economic growth] is unproven”. Accordingly, a careful
case-by-case assessment of individual reduction measures should be
carried out before a justifiable conclusion can actually be drawn.
●
Administrative burden reduction projects can affect competition by removing
barriers to entry (e.g. due to redundant registration procedures, or excessive
information requirements on micro enterprises, etc.); and by enabling a
smoother interplay of market forces, e.g. by eliminating frictions in the
market (e.g. obstacles to the diversification of a firm’s operations due to
excessive licensing obligations). Enhanced market competition can reduce
the deadweight loss associated with imperfectly competitive markets.
●
Administrative burden reduction projects can affect enforcement costs in several
ways:i) the reduction of ABs generated by specific information obligations
(such as regular reporting of risk or other confidential information) can be
associated with an increase in enforcement costs borne by public authorities
(as the information now must be collected directly by them instead of being
reported by the businesses); ii) at the same time, AB measurements can lead
to the identification of overlapping information obligations, leading to a more
efficient use of reporting and inspections by public authorities.
●
Administrative burden reduction projects can create environmental and social
impacts that are not registered by the Standard Cost Model itself. For example,
removing notification procedures for compliance with environmental
standards, or reducing inspections to check compliance with standards for
health and safety at work can harm citizens or employees. The private
benefit reaped by the business could be more-than-compensated by the
social loss borne by other categories.
A further challenge refers to the potentially negative incentives triggered by
AB reduction programmes. Depending on the definition of “ABs”, efforts by
regulators to achieve the set targets by minimising new costs may
compromise the effectiveness of newly introduced regulations. Such danger is
particularly topical as the goal of the AB programmes widens to encompass
substantial compliance costs. Specifically, if monitoring requirements and
tests compliance with regulatory standards, for instance, are defined as ABs,
what are the implications on the stringency of the proposed testing protocols
and the frequency of the test? (see Box B.7).
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Box B.7. AB reduction incentives and overall
regulatory effectiveness
Deighton-Smith (2007, p. 9) casts this doubt on the example of the
Radiation Safety Regulation 2007 in Australia. Such regulations were
supposed to require periodic testing of radiation sources, including medical
and dental X-rays, and other diagnostic equipment. The tests are intended to
ensure that the equipment complies with determined performance and
safety standards. However, the regulations define the costs of such tests as
ABs. Thus, Deighton-Smith argues, the department in question “can reduce
the extent of its increase in ABs by either limiting the range of equipment
required to be tested or by reducing the required testing frequency”. The
result would be that non-compliance with the standards will persist longer
before being detected and the chances to detect it are smaller.
This sheds a light on the necessity to integrate AB reduction efforts into the
overall rationale of maximising the overall benefits from the regulatory
intervention. Ex post evaluations should take this into account, and consider AB
programmes holistically. In this context, this means broadening the analysis to
encompass also the benefits that the presence of ABs generate, and proceed to a
cost-benefit analysis of the reduction programme. In other words, AB reduction
programme evaluations should not only assess the extent to which burdens have
been reduced (the reduction targets have been achieved), but also the costs
generated by the eliminations of determinate administrative requirements.
Against this background, carrying out detailed impact assessments of the
proposed reduction measures is highly recommended: given the broader scope
and greater depth of RIA as a tool, the proposed reduction of ABs could be
assessed within the broader context of the expected economic, social and
environmental impact of the reforms.
While performing IA on reduction proposals is the first best solutions, other
solutions may be adopted by ex post evaluators in absence of a detailed analysis of
reduction measures adopted. For example, the evaluation may rely on the
typology of IOs that have been affected by the reduction proposals – a useful
feature of most administrative reduction programmes is that they use a fairly
standardised list of IOs and administrative activities.16 In particular, the impact
on competition is more likely to be significant whenever the reduction proposals
affected applications for licences, authorisations, grants or subsidies. To the
contrary, reducing burdens related to the co-operation with authorities during
inspections, or the keeping of records overtime is less likely to lead to a
competitive impact on the market. On the other hand, the ex post evaluation of
the impact on monitoring and enforcement costs can be performed starting from
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the reduction proposals that reportedly affected IOs related to inspections. In the
ex post evaluation, it would be highly advisable to formulate assumptions as
regards the degree of business compliance with the information obligation at
hand: only by factoring in the analysis a reasonable compliance rate, the finding
of the evaluation could be considered reliable. A similar approach can be followed
starting from the administrative activities affected by the reduction, although
these types of activities are often combined in a single IO.
Box B.8. Features of SCM-based reduction programmes
The Standard Cost Model has been applied almost in the same way in many countries, with
very little variants. The main common features of these national measurements were the
reliance on the Standard Cost Model Manual (often in a national version that almost entirely
mirrors the International SCM Manual); the reliance on external consultants (with some
exception, e.g. the Czech republic); the involvement of several ministries in charge of businessrelated legislation; and the almost exclusive focus on burdens for businesses.
An analysis of four case studies (Netherlands, Denmark, United Kingdom and Czech
Republic) in 2006 led to identifying the following differences:
● Scope of measurement: Some countries, such as the Czech Republic and Denmark, only
calculate administrative costs faced by private enterprises, whereas the United Kingdom
calculates costs for private and semi-private businesses, and the Netherlands also includes
citizens and (after 2007) public administrations. The EU model is more ambitious, as it
includes citizens and also public administrations. Also, in Germany and the Netherlands the
focus has shifted gradually towards a broader definition of costs, which includes (besides
ABs) also substantive compliance costs.
● Targets: Most countries have selected a 25% “political” target reduction of administrative
costs. An exception is the Czech Republic, where the target selected is 20%; in addition, some
countries – such as the Netherlands and, to a lesser extent, the United Kingdom – decided to
set (at a later stage) specific targets for ministries/departments, whereas others – like
Denmark and the Czech Republic – have not set different targets for specific ministries.
● One-off costs: Most countries – with the exception of the Czech Republic – do not include
one-off costs in the baseline measurement. However, in the United Kingdom model one-off
costs are included in the overhead, and the United Kingdom and Denmark include one-off
costs in the ex ante measurement carried out within RIAs. The proposed EU model specifies
that such costs, when non-marginal, “may be taken into account”. This was also the
approach chosen for the Dutch baseline measurement. In the Netherlands one-off costs are
qualitatively described when ministries report the results of their measurement.
● Obligations set by optional schemes: These information obligations are commonly referred to
as “voluntary obligations”. In Denmark and the United Kingdom, these IOs are taken into
account, if they are expected to arise from a quasi-regulation. In the United Kingdom, the
baseline includes also codes of conduct and guidance documents with government backing,
which cannot be considered as having binding force.
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Box B.8. Features of SCM-based reduction programmes (cont.)
● Distinction between “net” costs and BAU activities: “Pure” obligation refers to what one
would stop doing if the legal obligation was removed. * This means that the pure
obligation does not take into account business-as-usual activities (BAU) that firms would
undertake even absent a precise legal provision the mandates their performance. Some
countries measure only pure obligations (or hard-core administrative burdens, others
measure both “net” burdens and BAU activities.
● Overhead: In the United Kingdom, a 30% rate was chosen, compared with the 25% rate
used in the Netherlands and in Denmark. In the Czech Republic, a specific overhead
percentage has been set by particular ministries, and no standard overhead percentage
for all ministries and administrative authorities is foreseen.
● Demarcation: Most countries use a default 50:50 split whenever an IO/DR is found to fall
under the competency of more than one department. In the United Kingdom, the need
for demarcation was foreseen, but no 50:50 split rule was chosen. The most appropriate
split is therefore set through negotiation between departments, and normally the
department that has taken the regulatory initiative keeps ownership of the corresponding
obligations.
● Segmentation: In practice, segmentation criteria differed noticeably. In the United
Kingdom, industry sector and type of activity proved more useful than firm size (except
for the tax measurement undertaken separately). In the Netherlands, Denmark and the
Czech Republic firm size was a guiding principle.
● Accuracy and costs: The Danish and United Kingdom models seem likely to reach a
higher level of accuracy in the estimates, also due to the intensive involvement of
consultants, the more detailed breakdown of IOs into data requirements (Denmark) and
the further breakdown of the classification of origin (Denmark and United Kingdom).
The UK database seems the most suited to retrieve original pieces of EU legislation,
although with some gaps. The greater accuracy, however, is reflected also in the cost of
the measurement, especially as regards the United Kingdom.
● Organisational patterns: The four national models under scrutiny exhibit some differences
as regards the role played by ministries, central co-ordinating units and consultants. The
Dutch and Czech models rely on ministries much more than the Danish and UK models.
In the United Kingdom, ministries/departments are involved only in the initial step of
the measurement, which is then carried out mostly by the consultant with the
supervision of the BRE. In the Netherlands, IPAL is involved mostly in the review of
activities performed by ministries and consultants, and in the final stages of the
measurement. In the Netherlands, consultants are not involved in the final reporting
and transfer to database, whereas in Denmark and the United Kingdom the setting up of
a database was achieved with a strong involvement of consultants.
* The external body carrying out the evaluation may belong to the state institutional setting (e.g. a
parliamentary committee or commission; the Court of Auditors or similar audit institutions, or the
Ombudsman office), or be other public and private organisations such as universities and research institutes,
think tanks, foundations and other stakeholders. The degree of autonomy of these bodies varies.
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Towards a policy evaluation for administrative burden reduction
programmes
As discussed in the previous sections, while AB reduction programmes
have become increasingly popular and widespread in OECD member states,
the set of indicators needed to perform a comprehensive evaluation of these
programmes has not been the subject of a lot of discussion or even scholarly
research. As observed in the section on assessing effectiveness above, the
diversity of scope and goals in different countries also hampers the attempt to
define a common set of indicators and methodologies to reach an informed
evaluation of the effectiveness, efficiency, usefulness and proportionality of
these programmes.
To be sure, this diversity in the national programmes calls for an
articulated set of indicators and tests. A useful taxonomy of indicators has
been developed for instance in Italy, and includes:
●
Implementation indicators, which aim at monitoring the progress made in the
ABs reduction activities and indicates the percentage of realisation of each
measure.
●
Results indicators, which aim at accounting for the effective realisation of the
specific targets of each measure.
●
Impact indicators, which aim at assessing the benefits for the users of
regulation.
Below, we adopt a slightly broader perspective and introduce a 4-step
test. We discuss first of all the timing of the evaluation exercise, the
measurement of effectiveness (explained as achievement of the stated goals);
the proportionality of the exercise (including the quality of the measurement
and the performance of the programme management); the final outcome
perceived by the addressees of the programme; and the efficiency and
macroeconomic impact associated with the programme.
Timing and scope of the evaluation
Before discussing what to evaluate and how, it is useful to briefly reflect
on when should ideally an ex post evaluation take place. In this respect, all
depends on the scope of the evaluation exercise. In particular:
●
122
If the evaluation is aimed at assessing whether the design and
implementation of the measurement programme has been optimal or at
least satisfactory, then the exercise should ideally take place at the end of the
measurement. There is no need to wait for the actual outcome of the
reduction measures to materialise, as the evaluation falls on the inherent
quality of the process. In order to avoid that too much time elapses, we would
ideally place the evaluation at the end of the measurement. The results of
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this evaluation may then be used as inputs for preparing a second round of
measurement after the implementation of the reduction measures.
●
If the evaluation focuses on the choice of the reduction measures, then the
appropriate timing would fall immediately after the reduction measures
have been identified, and should focus on the process that has been
followed to translate the results of the measurement into concrete
reduction proposals. Countries have used different strategies to reach a list
of reduction proposals, but today there is no common wisdom on how to
move from measurement to reduction. A common feature – which could
form the object of an evaluation – is the use of an external advisory body in
charge of supervising the project and/or formulating proposals. With some
differences, this is the process that was followed in the Netherlands
(through Actal), in Germany (through the Normenkontrollrat)17 and at EU
level (with the appointment of the High-Level Group on Administrative
Burdens, also called “Stoiber group”.18 When such oversight bodies are
appointed to make suggestions for reducing red tape, they should not be
also empowered with the evaluation of this process, otherwise they may
end up overseeing their own activity, which obviously creates a conflict of
interest and will not trigger the virtuous incentive mechanism that is
associated with oversight and evaluation.
●
If the evaluation addresses the impact of the measurement, then it should
ideally take place sometime after the reduction measures have been adopted
and implemented. It is no mystery that legal measures are not adopted
instantaneously by the business sector, by citizens or even by public
administrations. In order to capture the effect of the simplification measures,
it is necessary to wait some time to enable the regulators and the regulated
entities to adapt to the new measures, which may require organisational
changes and a reallocation of resources – arguably to more productive uses.
As is immediately observed, the main phases of a measurement and
reduction exercise are intimately interdependent. The quality of the
measurement, in particular, dramatically affects the quality of reduction
proposals – the better the information collected, the more informed and
accurate is the decision on when and how to reduce burdens. Likewise, the
quality of reduction proposals affects the final outcome of the simplification
exercise, as well-targeted reductions are likely to have a greater beneficial
impact on businesses, administrations and citizens than ill-conceived ones.
This also includes the assessment of all the prospective impacts of reduction
measures through impact assessments: when this is done properly, the
outcome of the simplification programme is likely to be more beneficial, with
little or no negative impacts in terms of higher costs other than ABs, or lower
benefits due to the fact that previous legislation has been repealed or
amended (see above, section on Efficiency: are we cutting also benefits?).
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To sum up, the evaluation exercise should be i) timely and ii) continuous.
Since timeliness depends on the scope of the evaluation, we conclude that the
best way to organise an evaluation process is not to focus on a specific point
in time, but to establish a continuous mechanism of monitoring and evaluation.
This can be summarised as follows:
●
After the measurement exercise has been completed, there should be a first
progress report which contains: i) an evaluation of the way in which the
measurement has been designed and implemented; and ii) suggestions for
translating the measurement results into concrete reduction proposals,
based on an evaluation of the likely accuracy of the measurement.
●
During the “reduction period”, which lasts up to five years in programmes
based on the Standard Cost Model, there should be annual interim
evaluation reports based on clear indicators, aimed at assessing the
effectiveness and efficiency of the reduction proposals. These reports
should also contain suggestions on how to improve the drafting and
implementation of reduction proposals in the following years, and identify
areas in the database of ABs that would warrant the attention of the policy
maker as they contain candidates for beneficial red tape reduction.
●
One year after the end of the reduction period, there should be an ex post
evaluation of the effectiveness, efficiency, proportionality, actual perceived
impact and macroeconomic impact of the reduction programme, based on
clearly identified indicators, as discussed in the next section.
Figure B.3. Monitoring and evaluating simplification programmes
Ex post evaluation
of effectiveness,
efficiency, proportionality,
actual perceived impact
and macroeconomic impact
Annual interim evaluations
of the effectiveness and
efficiency of reduction
proposals
Evaluation of design
and implementation
of the measurement
programme
0
time
Measurement period
Reduction period
Evaluation period
Source: Compiled by the authors.
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Who should evaluate the reduction programme?
Another key issue in setting up the context for evaluation of
simplification programmes is deciding who should be in charge of the
evaluation. Based on the stages of monitoring and evaluation outlined above,
a natural question to be asked is whether the same body should be in charge
of all the stages of the evaluation process. In this respect, a common wisdom
in OECD countries has not emerged, but the following can be observed:
●
When it comes to assessing the proportionality of the measurement programme,
which includes the assessment of what resources have been spent and how,
audit offices/courts appear as the most appropriate bodies. This type of
exercise has been performed, for example, by the Court of Audit in the
Netherlands and by the National Audit Office in the United Kingdom.
●
For what concerns the effectiveness and efficiency of the reduction proposals, the
most appropriate bodies may be regulatory reform units in charge of quality
assurance and oversight of the impact assessment process. Alternatively, ad
hoc advisory bodies may be entrusted with the scrutiny of the government’s
activity. These bodies have the skills and competences needed to assess the
substance of the reduction proposals, especially when reduction measures
undergo a full-fledged impact assessment. These bodies should also be in
charge of contributing to the annual interim evaluation, or authoring them
directly.
●
As regards the final evaluation, the body in charge of adopting the final
evaluation report should ideally be an ad hoc body in charge of scrutinizing
the government’s activity. At this final stage of the evaluation process, an
external expert study could be considered, especially in order to validate
the assumptions concerning the macroeconomic impact of the reduction
proposals. Finally, in some countries, this final evaluation was carried out
independently by Parliamentary committees (e.g. in Switzerland). At the
same time, an external survey (similar to the Dutch “perception monitor”,
see Box B.3) may be commissioned to assess the actual outcome of the
simplification programme in the perception of the regulatory addressees.
What exposed above does not imply that it is desirable to promote an
autonomous evaluation culture external to the public administration and the
system of State institutions. The richer the contribution of external peerreviews by research institutes, think tanks, foundations, the private sector and
civil society organisations, the more sound and comprehensive is the
evaluation on AB programmes. In particular, the contribution of external
reviews by international organisations can prove essential to stimulate
demand for better design, implementation and appraisal of simplification
programmes. This implies enhancing the awareness and responsibility of all
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stakeholders concerned of the relevance of shaping up mechanisms for a
holistic evaluation function.
A multi-step test
The evaluation of a simplification programme is a multi-purpose, multidimensional exercise, which looks at a number of different aspects of the
exercise, takes place at different points in time and is ideally performed with the
contribution of more than one group of evaluators. Below, we develop a sketched
version of a 4-step test which looks at aspects such as the proportionality,
effectiveness, efficiency, macroeconomic impact and perceived actual impact of
the reduction exercise.
Step 1: Proportionality test
The first step of the evaluation should take place at the end of the
measurement exercise, and should look at whether the measurement process
has been organised and managed effectively. Important indicators to be
considered at this stage include the following:
126
●
Resources allocated (in terms of person/months, and money).
●
Profile (background) of the human resources allocated.
●
Terms of reference and budget of consultant(s) used (if any).
●
Existence of a central management unit.
●
Degree of standardisation of measured parameters (e.g. salary schemes,
lists of IOs and administrative activities, common duration of similar
activities, etc.).
●
Use of empirical techniques (share of total measurement).
●
Performance of regular consistency checks (across areas of legislation).
●
Reporting of administrative costs and burdens (i.e. costs net of the BAU
factor).
●
Reporting of irritation burdens (qualitative).
●
Coverage of costs other than ABs (quantitative).
●
Coverage of costs for public administrations.
●
Coverage of costs for citizens.
●
Reporting of potential solutions to ease the burden.
●
Reporting of potential e-government solutions.
●
Development of a publicly accessibly database (AB calculator).
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Step 2: Effectiveness and efficiency test
The next step of the evaluation exercise looks at whether the stated goals
of the simplification programme have actually been achieved. Needless to say,
the right questions to ask at this stage depend on the goals originally set by
the government in launching the reduction programme.
In line with our analysis in the above section on Assessing effectiveness,
we consider the following indicators to be very useful at this stage:
●
The number and type of procedures that have been simplified or repealed.
●
The correspondence between the results of the measurement and the
selection of reduction measures.
●
The likely compliance rate of the repealed and amended IOs.
●
The estimated amount and type of resources that business has actually
freed up further to the reduction of AB.
●
Whether there has been a careful impact assessment of reduction
proposals, which considered a number of policy alternatives.
●
Whether reduction proposals, while likely to reduce ABs, are also likely to
increase other compliance costs.
●
Whether reduction proposals, while likely to reduce ABs, are also likely to
reduce benefits even further.
●
Whether reduction proposals, while likely to reduce ABs, are also likely to
increase enforcement costs for public authorities.
●
Whether similar reductions of administrative burdens could have been
achieved also by other means (e.g. through a one-stop shop).
Importantly, this step of the evaluation process crucially depends on
whether the evaluator has the necessary skills and competences to perform
an economic analysis of the reduction proposals, and/or an ex ante impact
assessment of these proposals.
Step 3: Perceived outcome
The third step of the evaluation process can be considered as part of the
“effectiveness” screen, in that it looks at the actual impact that reduction
proposals had on the targeted players – be them businesses, NGOs, citizens, or
public administrations. The difference between this and the previous step is
that Step 2 looks at the potential impact of the reduction proposals, whereas
Step 3 collects data from the direct beneficiaries on the actual impact that the
reduction proposals exerted on them. A second, related difference refers to
the methodology used, which in Step 3 relies on the use of empirical techniques –
mostly, surveys. Surveys are also important to find out whether simpler
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administrative requirements have brought about streamlined and more
effective internal procedures and human resources management.
Notable examples of surveys used include:
●
the Dutch perception monitoring study, illustrated in Box B.4 above. This
tool relies on a standard questionnaire distributed to a sample of
businesses;
●
the French Business Panel Questionnaire, which is sent to a sample of
businesses and related to some specific situations of the life of an
enterprise, with the aim of tracking the perception of improvement in
cutting red tape over time;
●
in New Zealand, the Inland Revenue reviews perceptions of compliances
costs through the SME Tax Compliance Costs Survey. A survey was done
in 2004 and a follow-up was completed in 2009;19 and
●
the surveys carried out by the National Audit Office in the United Kingdom
in 2007, 2008 and 2009. Each survey targeted a sample of 2 000 businesses to
track businesses’ perceptions of the burden of regulation.20
Using large scale surveys is particular important since the ultimate
perception of businesses and other addressees of the simplification programme
is what determines the success and the effectiveness of the initiative. This is
even more important for projects that are relying on the Standard Cost Model,
especially since this methodology assumes 100% compliance rates with each
and every IO: when the actual compliance rate is relatively low for some IOs,
eliminating or amending those IOs may have a very limited impact on the
affected businesses.
In addition, as observed in the above section on Assessing effectiveness:
●
When the simplification programme includes citizens, surveys are essential
to capture the perceived reduction in ABs: in some cases, other indicators
may be used – e.g. quality of service (QoS) indicators such as delays, delivery
times, reaction time for emergency requests, waiting time in call centres,
etc.), which have to be identified on a case-by-case basis.
●
When the measurement programme includes public administrations, specific
indicators should be used in ex post evaluation. These include indicators on
resources allocated for each activity targeted by the reduction programme,
but also other indicators such as the number of inspections, or the time
needed to monitor specific activities.
Step 4: Macroeconomic impact
This final step of the evaluation process should assess whether the
reduction programme has actually led to the enactment of measures, which
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could boost economic growth and productivity in the near future. Accordingly,
at this stage the evaluators should gather additional data, including:
●
The estimated amount and type of resources that business has actually
freed up further to the reduction of AB (from Step 2 above).
●
The estimated percentage of these resources that was reallocated to more
efficient and productive activities.
●
The increased entry of new firms due to a more business-friendly
environment.
●
Increased production and/or lower prices due to higher productivity and
enhanced market competition.
●
Data on labour productivity in the areas and administrative activities
affected by the reduction proposals.
●
Data on R&D spill-overs due to the availability of resources freed up by the
reduction programme.
●
Data on effects on the terms of trade in the areas affected by the reduction
proposals.
These indicators are clearly aimed at assessing the macroeconomic
relevance of reduction measures adopted. The overall impact on the business
environment can further be captured by using descriptive indicators on
procedural aspects, such as:
●
Evidence of speedier, simpler decision making (through process
re-engineering; the rationalisation of licence and permit delivery (e.g. through
the “silence-is-consent” rule, etc.).
●
Enhanced transparency of regulatory and administrative activity.
●
Smoother implementation of legislation.
●
More durable legislation.
●
More in general, whether legislation has become more client- and/or goaloriented or is still procedure-based.
Conclusions and recommendations
This paper responds to the growing need to gear up the programmes to
measure and reduce AB launched in many OECD countries to a further stage.
Over the past years, countries have launched and implemented various
versions of such programmes, often intervening with both methodological
refinements and/or extensions of their scope of application. Today, AB
reduction programme vary from business-focused calculations and
reductions of red tape generated by information obligations rooted in legal
provisions, to more comprehensive programmes that extend their reach
outside the business sector – e.g. to citizens and public administrations – and
WHY IS ADMINISTRATIVE SIMPLIFICATION SO COMPLICATED? © OECD 2010
129
ANNEX B
beyond the mere assessment of administrative burdens, to account also for
other compliance costs.
The high visibility and popularity of AB reduction programmes contrast
with the perception among wide circles of stakeholders that the actual effects
of the reduction programmes are not self-evident – despite the considerable
resources invested, and the relatively smooth collaboration between the
government and businesses. Questions arise as to whether the programmes
really constitute “value for money”; and whether there has merely been a shift
of burden from the private to the public sector.
It is widely acknowledged that carrying out ex post evaluations of AB
reduction programmes so far implemented constitutes a key factor to address
these and other questions. Yet, programme evaluations remain relatively rare
in the OECD countries. Most of the evaluations undertaken tend to focus on
the progress towards achieving the given reduction target, and summarise the
total saving on AB, which has been removed. Considerations on the efficiency
of the programmes, the quality of their management, and the actual welfare
impacts on the economy and the society, by contrast, are often not examined
in detail.
This paper investigates the broad benefits from AB reduction
programmes and advises on the development of a possible methodological
framework that could be used for evaluating existing and future programmes.
To this end, the paper has reviewed the existing literature on policy
evaluation, putting particular emphasis on the specific features of the
evaluation of AB reduction programmes. It has identified and discussed the
main expected benefits and challenges related to the programmes; and
proposed an evaluation framework for assessing the impacts of an AB
reduction programme. The framework relies on a multi-criteria analysis
approach and should assist national governments in undertaking an ex post
evaluation of their AB reduction programmes.
The next sections summarise the main findings of the paper and make
recommendations that the authors believe will help governments address the
main shortcomings of current approaches to evaluating AB reduction
programmes and improve the understanding of their implications.
Adopting a comprehensive approach to evaluation
The paper invites evaluators not to limit their task to assessing whether
the quantitative targets have been reached within the set deadlines. The latter
is clearly an important element that must be ascertained, and has the merit to
be often a straight-forward task. However, such a minimal evaluation would
necessarily be of limited impact for the overall understanding of the
implications that the AB reduction programme brought about. After all, an ex
130
WHY IS ADMINISTRATIVE SIMPLIFICATION SO COMPLICATED? © OECD 2010
ANNEX B
post evaluation exercise should aim at assessing whether the reduction
programme has brought benefit to the regulatory addressees and to society as
a whole. Embracing a comprehensive approach to evaluation, in this respect,
means that evaluation should go beyond the mere scrutiny of strictly costreduction measures. More in detail:
●
All possible organisational impacts should be integral part of the analysis, including
i) faster and more transparent decision making; ii) better implemented,
enforced and durable legislation; and iii) a new administrative culture based
on a client-oriented approach.
●
Economic impacts should be a core component of the evaluation exercise.
Accordingly, evaluators should consider designing and carrying out a
holistic, comprehensive evaluation, which integrates a series of equally
important tests. Such tests should cover: i) the proportionality criterion
(Step 1 in the paper); ii) the effectiveness and efficiency criterion (Step 2);
iii) an assessment of the “perceived outcome” (Step 3); and iv) an assessment
of the macroeconomic impacts (Step 4).
●
Linking AB reduction measures with ex ante impact assessment
A comprehensive approach to evaluation should also encompass the
consideration of the opportunity costs of reducing administrative
requirements such as information obligations. The gains in public welfare
obtained from inspecting compliance with standards and protocols, for
instance, should be taken into account in the overall appraisal of the AB
reduction programmes. Accordingly, reduction proposals generated by
AB baseline measurements should be scrutinised through a comprehensive
impact assessment, which ensures that the new measures do not bring about
more prospective costs than the benefits they are likely to generate in terms of
cutting red tape. Additional costs may consist in greater compliance costs
(other than administrative burdens) for businesses or citizens, greater
monitoring, enforcement and inspection costs for public authorities. In
addition, reduction proposals might exert a negative impact on society if they
eliminate, along with administrative burdens, also beneficial effects that were
exerted by the legislation that is being repealed or amended.
Against this backdrop, reduction proposals should undergo a
comprehensive, proportionate RIA, which looks beyond administrative
burdens and approaches a full-fledged cost-benefit analysis of the new
measures against the status quo.
WHY IS ADMINISTRATIVE SIMPLIFICATION SO COMPLICATED? © OECD 2010
131
ANNEX B
Ensuring a continued, multi-actor evaluation effort
Because the rationale and scope of the evaluation may vary, there should
be sufficient flexibility in determining when and who should carry out the
evaluation. In this respect, the paper recommends the following.
●
The evaluation process should start early and continue throughout the duration of
the reduction programme. As occurs for many better regulation tools, a
successful ex post evaluation should ask the right questions, at the right
time and in the right sequence. In the case of AB reduction programmes,
this means that the evaluation of the design and implementation of the
measurement phase should start immediately at the end of that phase; the
evaluation of reduction measures should rely on annual progress reports
and ongoing monitoring; and the final evaluation of the economic impact of
the reduction programme should ideally take place one year after the end of
the reduction period, to allow the beneficiaries of the reduction measures to
adapt to the changes introduced.
●
Different methodologies should be used in the different steps of the evaluation
process. Evaluating AB reduction programmes implies the use of a number of
different techniques. In particular, cost-effectiveness analysis is
appropriate when it comes to assessing proportionality; cost-benefit
analysis is required to assess the impact of AB reduction measures; and
surveys or dedicated workshops are needed to capture the perceived impact
of those measures on the business sector.
The following table (based on Figure B.3 above) summarises the
considerations made throughout the paper on the matter.
Table B.5. Ensuring a continued, multi-actor evaluation effort
What is evaluated?
When should evaluation occur?
Who should evaluate?
Design and implementation of the
AB reduction programme
At the end of the measurement
Audit bodies and courts
Choice of the reduction proposals,
Immediately after the identification
and their effectiveness and efficiency of the measures
Regulatory reform units, or ad hoc
advisory bodies
Effectiveness, efficiency,
proportionality, actual and perceived
impact and macroeconomic
Ad hoc body, possibly external expert
panel
Some time after implementation
of the measures
Source: Compiled by the authors.
Parallel to this, it is desirable if pressure for evaluation emerges also from
outside the government and public administration. A mature AB reduction
programme is one that enjoys constructive collaboration and scrutiny from
the external stakeholders. The success of AB reduction programmes, like any
other Better Regulation initiative, strongly depends on the political commitment
132
WHY IS ADMINISTRATIVE SIMPLIFICATION SO COMPLICATED? © OECD 2010
ANNEX B – NOTES
ANNEX B – NOTES
and the awareness that reform is a shared responsibility. The creation of a
multiple, continuous “evaluation function” is a vital element for the success of
any reform policy.
Notes
1. This paper was prepared by Lorenzo Allio, policy analyst and consultant
([email protected]) and Andrea Renda, Senior Research Fellow at the Centre
for European Policy Studies in Brussels ([email protected]).
2. In 2008, 30 out of 31 jurisdictions declared to have such programmes, compared
with 26 in 2005 and 18 in 1998. Most programmes address burdens on business.
Only nine countries measure also burdens on citizens, and just four on the public
sector (OECD, 2009b, pp. 81ff).
3. Accordingly, the paper does not recapitulate the various international practices
with cutting red tape. For such an overview, the interested reader is invited to refer
to the mentioned references.
4. This paper was drafted in the context of the OECD Cutting Red Tape II initiatives,
and as such could draw on the results of a wide consultation of national
governments on the issue of administrative burdens reduction. In that context,
several countries declared that reforms are too recent to allow for a serious ex post
evaluation. See responses sent by Finland, Slovenia, Ireland, European
Commission. The Swedish government announced that it commissioned the
Agency for Growth Analysis to evaluate the effects of the current administrative
reduction program. The project will commence 1st January 2010 and will continue
to the end of 2010, and aims to link administrative reduction to economic growth,
both in businesses and for the economy as a whole.
5. This is the case for the Dutch second measurement carried out in 2008. See OECD
(2009a, p. 10).
6. Again, this is the case of the Netherlands, where an ad hoc measurement for
citizens was organised.
7. The literature often refers to “programme” or “intervention theories” in this
regard. Intervention theories are defined as a model of “micro-steps or linkages in
the causal path from program to ultimate outcome” (Rogers et al., 2000, p. 10). See
also Chen (1990); and Vedung (1997).
8. The term “effect” is used in this paper generally, encompassing various types of
outcomes. It is considered a synonymous of “impact”.
9. The Joint Committee lists “utility”, “feasibility”, “property” and “accuracy” as the
main categories of standards.
10. Not always does the government have to face such choice. External evaluations
may be imposed ex officio to a given audit institution; or they may originate
autonomously among civil society.
11. In most countries that have measured administrative burdens by using the
Standard Cost Model, including the Netherlands, burdens have been classified as
“A” when their origin was traced in EU or international legislation ; as “B” when
they were originated in national legislation that implemented EU or international
rules; and as “C” in case of purely national legislation. Some countries – e.g.
Denmark and the UK – have used a more sophisticated taxonomy, which breaks
WHY IS ADMINISTRATIVE SIMPLIFICATION SO COMPLICATED? © OECD 2010
133
ANNEX B – NOTES
down both the “A” and “B” categories in three sub-categories, depending on
whether the burden originated from a EU Directive, a EU regulation or another
source of international law (e.g. ILO Treaties). See, inter alia, Boeheim et al. (2006).
12. See the response by Finland to the questionnaire sent within the Cutting Red
Tape II initiative.
13. See the Wifo-CEPS Pilot Project on administrative burdens authored by Boeheim,
Renda et al. (2006), available online at http://ec.europa.eu/enterprise/policies/betterregulation/files/pilot-study_en.pdf.
14. Data from Boeheim et al. (2006).
15. For example, in the UK a single consultant was used for the main measurement –
two separate consultants were used for the measurement of the tax and financial
services areas. However, the main consultant (PwC) had broad terms of reference,
which included the development of an online “administrative burdens calculator”,
which allows surfing through the database. Similar tasks have been commissioned
in Germany and at EU level (not available yet).
16. See Box 11 and Box 13 in the International Standard Cost Model Manual, which
report examples of IOs and standard administrative activities. The Manual is
available at www.oecd.org/dataoecd/32/54/34227698.pdf.
17. For example, the evaluation by the Normenkontrollrat encompasses three main
questions: i) Have the expected administrative costs – resulting from information
obligations – been quantified and described in a comprehensible manner? ii) Have
appropriate efforts been made to consider alternatives which might cause less
administrative costs? iii) Was the alternative with the smallest burden chosen
within the scope of the intended regulation aim? The NKR has no veto power. His
comments are sent to the Cabinet and later on – as a part of the draft law – to the
parliament. At this point they become public. See, inter alia, Wegrich, 2009.
18. At the EU level, the Commission created on 31 August 2007 the High Level Group
of Independent Stakeholders on Administrative Burdens (HLG), chaired by
Dr Edmund Stoiber. This Group had a three year mandate. Recently President
Barroso announced the intention to extend the mandate of the Group for further
two years. The members of the Group include leaders of several bodies responsible
for fighting red tape at member state level, representatives from the worlds of
industry, small and medium sized enterprises (SMEs) and environmental and
consumer organisations, all having first-hand experience with Better Regulation.
The HLG advises the Commission on the implementation of the Action
Programme and makes recommendations on administrative burden reduction
measures.
19. The objectives were: i) to measure SME tax compliance costs in 2009; ii) to measure
the change in SME compliance costs since 2004; iii) to evaluate the effectiveness of
GST and Provisional Tax alignment at making tax easier for business. For both
the 2004 and 2009 SME Tax compliance cost surveys, the SMEs surveyed were
asked to rate on a seven-point rating scale, with seven being “extremely stressful”,
how stressful did they find meeting the requirements for the various tax/
regulation types. These questions asking about the stress levels experienced by
the surveyed SMEs are on top of the questions asking them to quantify, per tax/
regulation type, the amount of time they spent on doing the different tax-related
activities.
20. See e.g., the 2009 business perception survey by the National Audit Office at
www.nao.org.uk/publications/0809/complying_with_regulation.aspx.
134
WHY IS ADMINISTRATIVE SIMPLIFICATION SO COMPLICATED? © OECD 2010
ANNEX B – BIBLIOGRAPHY
ANNEX B – BIBLIOGRAPHY
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136
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(42 2010 24 1 P) 978-92-64-08973-0 – No. 57527 2010
Why Is Administrative Simplification So
Complicated?
Looking beyond 2010
Until now, efforts to reduce administrative burdens have primarily been driven by
ambitions to improve the cost efficiency of administrative regulations, as these impose
direct and indirect costs on regulated subjects. Many countries will finish their current
projects over the next few years and must decide how to continue their efforts and how
to make them more efficient.
This report looks beyond 2010 and presents policy options for administrative
simplification that are in line with current trends and developments. It provides policy
makers with guidance on the available tools and explains common mistakes to be
avoided when designing, undertaking and evaluating administrative simplification
programmes.
Looking beyond 2010
The full text of this book is available on line via this link:
www.sourceoecd.org/governance/9789264089730
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www.sourceoecd.org/9789264089730
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isbn 978-92-64-08973-0
42 2010 24 1 P
Why Is Administrative Simplification So Complicated?
“Too much ‘red tape’!” is one of the most common complaints from businesses and
citizens in OECD countries. Administrative simplification is a regulatory quality tool
to review and reduce administrative and regulatory procedures. It has remained high
on the agenda in most OECD countries over the last decade and continues to be so.
Countries’ efforts to strengthen their competitiveness, productivity and entrepreneurship
during the current recession have made simplification efforts even more urgent.
Cutting Red Tape
Cutting Red Tape
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Cutting Red Tape
Why Is Administrative
Simplification So
Complicated?
Looking beyond 2010
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